A reminder: The house always wins.
The gambling industry is devised to make money. And in the case of Kansas, bucketloads, thanks to lawmakers who recently ensured the sports betting industry will receive embarrassingly favorable tax breaks.
Folded into the sausage in the waning hours of last April’s legislative session was a measure that halved the 20% tax rate on industry revenues that legislators had previously settled on. Even that rate would have been substantially lower compared to other states’ tax rates on the industry.
The upshot is that Kansas will receive a pittance of its due.
BETTING on professional sports became legal in 2018 when the U.S. Supreme Court ruled federal prohibition was unconstitutional.
Kansas law took effect in September. In just two months, sports gambling revenues exceeded $350 million. Kansas’ take? A paltry $270,000.
We are giving the house away, according to experts.
“States have leverage — they are just getting outmaneuvered,” said Joe Weinert, executive vice president at Spectrum Gaming Group, which analyzes the gambling industry, in a recent New York Times story.
“The legislators have a fiduciary responsibility to the taxpayers to get the maximum amount possible. But these companies are just laughing all the way to the bank.”
Another example of Kansas’ short-sightedness is allowing the industry to fully deduct from their taxable income anything they spend on “free” promotions.
This is how it works.
Draft Kings, for example, advertises “risk-free” bets and other “free” promotions to entice customers. Though they say they’ll reimburse users for any losses, that’s not true. Participants will never see that money again. Instead, they are reimbursed with “credits,” good only for placing more bets.
Nationwide, the sports-betting industry has doled out nearly $1 billion in such promotional bets over the last year — costing states more than $120 million in potential taxes, according to an analysis of the data by The Times and Vixio, a gambling industry compliance company.
KANSAS LEGISLATORS needing convincing were sold on the idea that legalized sports betting would bring untold wealth to Kansas’ coffers.
In truth, what money Kansas does receive will go to a fund aimed toward luring the Kansas City Chiefs to build a new stadium in Kansas, further feeding the border war frenzy that legislators pretend they have no interest in fostering.
