Since launching this past September, legal sports betting in Kansas has exceeded initial expectations and then some. That didn't change in December, either. Kansas sports betting revenue closed the year by doubling its profit from the previous month.
The state released these latest tax revenue findings on January 19. Previously, Kansas sports betting revenue tripled between October and November. And now, it has somehow doubled up from that increase.
There is still some confusion surrounding what this means. How much money did Kansas actually make off sports betting in December? And how much money have they made from tax revenue in total since launching in September? A lot of different numbers are being thrown around. That can make the results tough to follow.
That's where we come in. We dug into the latest report on Kansas sports betting revenue to see just how well the state is faring—and what that means for the overall future of sports betting Kansas.
Kansas Sports Betting Revenue Generated More Than $1 Million in Additional Taxes During the Month of December
When discussing sports betting revenue, it can be difficult to discern between what's profit and what's just the total money wagered. Below, you can see we've put together a cheat sheet for you follow in the future, both for Kansas sports betting revenue and revenue talks across the United States in general:
- The Handle: This refers to how much money was bet over a period of time. For example, Kansas' "Handle" since the September sports betting launch sits at around $717.8 million. This means that Kansas sportsbooks have accepted $717.8 million in total wagers, before accounting for any winning wagers and payouts.
- Revenue: This refers to how much money the sportsbooks made in a given period of time. Essentially, it is the difference between the "Handle" and how many wagers were won by the house (aka the sportsbooks). Since September, the Kansas sports betting revenue for bookmakers checks in at over $21.4 million. This is the money sportsbooks will keep and then pay taxes on to the state.
- Taxes/Jurisdiction Revenue: This refers to how much money the state has made off the sportsbooks once they pay taxes on their total revenue. In Kansas' case, they have now made around $2.1 million in tax revenue since the September sports betting launch. That number may not seem too high given how much sportsbooks made, but it's money to which the state didn't previously have access. So, yes, it matters.
It's also important to note that Kansas sports betting revenue clearly hasn't hit its ceiling. According to the Kansas State Lottery, September, October and November, generated a combined $1.05 million in additional tax revenue. For December alone, however, the state raked in around $1.04 million in additional tax revenue. This basically means that Kansas made just as much in December as they did through the first three months of legal sports betting combined.
That's an outrageous increase. And it has many seeing dollar signs. But is this growth sustainable?
Expect to See Dips in Kansas Sports Betting Revenue Moving Forward
While the increase in Kansas sports betting revenue is encouraging, it should not be considered a normal rate of growth. A confluence of factors contribute to how quickly it has exploded.
First and foremost, sports betting promotions started to expire after the first month of the legal gambling rollout. These promotions are exactly what you think they are: deposit bonuses for customers signing with any one of the highly reviewed online sportsbooks operating within the state. Bookmakers worked out a deal with Oklahoma that ensured they would not pay taxes on any business generated through free-money promotions. And since bettors typically wager their bonuses before dipping into their own cash stores, the outpouring of sports betting promotions deflated Oklahoma's tax revenue.
This repression was most evident in September and October, but it was still at play in November and December. As the amount of promotional funds dwindles down even further, Kansas cannot expect to see such large upticks in taxes paid.
The time of year is also something else to consider. December and January are among the most lucrative sports betting months in the United States. They overlap with college football championship betting as well as NFL playoff betting. Wagering will typically slow down around the second week of February for a bit, right after people bet on the Super Bowl.
Though this means that Kansas sports betting revenue might continue its upward climb in January, the state should be expecting it to fall or level off in February and beyond.
Will Popularity of Sports Betting in Kansas Prompt Tax Hikes?
None of this is to say that Kansas should brace for an extended downswing. Sports betting is clearly both popular and lucrative in the state—and thus a success. And it has many legislators wondering whether there's even more money to be made.
Chief among these voices is Governor Laura Kelly. She is already campaigning for the state to raise their tax rates for online sportsbooks. Retail bookmakers obviously won't be in favor of the move, but it turns out Kansas might have the leverage to institute an increase.
Currently, Kansas only taxes sportsbooks at a rate of 2.9 percent. That is the lowest sports betting tax in the United States. Kansas initially offered it as a promotion of sorts; they wanted to entice retailers into setting up shop, and they weren't sure how the market would respond to legal sports betting in general.
Given how popular Kansas sports betting has been from the jump—again, the state has taken in almost three-quarters of a billion dollars in total bets over four months—it stands to reason that they can get away with asking sportsbooks for more. Whether Kansas seeks this increase in 2023 or down the line remains to be seen. But the potential for it to take effect is yet even more evidence that they were wise to join the legal gambling ranks.
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