Kansas creates example for other states not to follow
Legalizing sports betting is good. Doing it in the way a new bill in the Kansas Senate proposes is bad.
As individual states in the United States of America rush to get legislation on their books regarding sports betting in anticipation of the removal of the federal legislation which makes the activity illegal in 46 of 50 states, the state of Kansas has shown what can happen when lobbyists working for the professional sports leagues essentially write the legislation themselves.
SB455 has recently been introduced in the Kansas Senate, and it’s a home run for the interests of the sports leagues whose contests could be wagered upon legally under the bill’s terms.
Not only does the bill require sports books who want to operate legally in the state to pay the leagues a quarter of a percent of their revenue every quarter, but forces those books to make their data available in real time to the leagues and only use “official information” provided by the leagues, at a cost.
The bill labels the 0.25 percent fee that sports books have to pay each quarter to the leagues as a “sport betting right and integrity fee.” The leagues, however, have no authority to prevent people from betting on their games as demonstrated by the robust wagering on their contests which is happening in Nevada and in other countries without sports books in those venues “buying rights” to wager on those games from the leagues. Put plainly, the sports books in Kansas would pay the leagues for a fabrication.
The bill then says books shall use only official league data for determining results, made available for purchase by the operators “on commercially reasonable terms.” That’s vague language which gives the leagues all the leverage in the situation. The leagues would hold the rights to that data, and sports books would be required to purchase it to remain in compliance with the law.
Perhaps the biggest concern with the bill, however, is that it gives a lot of access to information about those who would place bets on the leagues. The leagues would get access to account-level information about bettors in real time. Depending on how that structure would end up looking, that could include bettors’ names, addresses, contact details, financial details, etc. The bill goes further by forcing books to cooperate with league investigations and turn over all their data, without requiring the leagues to get actual law enforcement involved. The bill endues the leagues with some of the powers of the state to police sports betting as they see fit.
In return for all these concessions made to the leagues, the state, and its citizens aren’t getting much of a return. The state’s general coffers will theoretically be enriched by licensing fees and taxes placed upon revenue generated by sports betting, but with the added expense of schilling out to the leagues four times a year and all the regulatory hoops, how much of the betting happening illegally will gravitate to the new legal channels?
Kansas does not have any franchises from the four major North American professional sports leagues within its borders. Because of that fact, businesses in Kansas will not see as much of the potential economic benefit of increased interest in sporting events that legalized sports betting could create as other states who have MLB, NBA, NFL and/or NHL teams within their borders.
With little benefit for Kansas and its citizens but huge upside for the leagues which have no presence in the state, it’s worth asking how this legislation was crafted. The answer to that is simple. MLB and the NBA have lobbyists registered in the state, including former Kansas Gov. Sam Brownback’s campaign manager Mark Dugan. Money lining the pockets of members of the Kansas legislature have produced this bill.
MLB and the NBA have made an investment in Kansas, and if this bill passes in a form close to how it reads, that investment could pay off. While the leagues and the legislators in Kansas line their pockets, the fans and people who voted those legislators into office will find that money came out of their pockets.