Sports Gambling Legalization

Brendan C. Smith

University of Kansas

Contents

First Section: Problem

Second Section: Policy

Third Section: Analysis

Problem

There is a multi-pronged problem with illegal sports gambling in Kansas. First, the state

of Kansas is missing out on millions of dollars annually in the sports wager market, when

compared to states that have legalized the activity in some way like New Jersey1. The market and

wealth generated by illegal sports gambling annually are estimated to be around $150 billion

1
Marchi, Jake. “The Economic Impact of Legalized Sports Gambling.” repository.arizona.edu.
The University of Arizona., May 1, 2020. https://repository.arizona.edu/handle/10150/651380.
Smith 2

annually in the United States.2 And the 29 states that have legalized sports gambling have

generated around $87 billion in revenue since a Supreme Court decision in 2018 that allowed

legalization to be up to state legislatures.3 With New Jersey taking in $1.26 billion last November

alone. Kansas is entirely excluded from this potential tax revenue stream that could bring in

millions every year and assist the state in funding a number of different policies and programs.

The revenue for the state and associated organizations can also be used to bring more sporting

organizations and venues into the state of Kansas.4

The second issue with illegal sports gambling is the same problem that comes with any

prohibition of large industry, whether it is marijuana and other drugs, prostitution, or alcohol. It

benefits organized crime organizations that are able to profit, and use the underground nature of

the industry to launder money, take advantage of people, and fund their other “ventures.” The

United Nations estimated that annually over $1.7 trillion is made through illegal sports gambling.
5
It also increases the social costs and negative outcomes for those involved unnecessarily. Not

having sports gambling regulations creates a situation where it is impossible to mitigate the risks

2
“UNODC Global Report on Corruption in Sport.” Accessed April 25, 2022.
https://grcs2021.unodc.org/res/safeguardingsport/grcs/indexNEW_html/BROCHURE_CORRUPTION_SPO
RT_PROGRAMME.pdf.

3
Marchi, Jake. “The Economic Impact of Legalized Sports Gambling.” repository.arizona.edu.
The University of Arizona., May 1, 2020. https://repository.arizona.edu/handle/10150/651380.

4
Tim Carpenter, Kansas Reflector April 2. “Kansas Sports Wagering Bill Earmarks 80% of State Revenue to Pro
Sports Stadium.” Kansas Reflector, April 7, 2022.
https://kansasreflector.com/2022/04/02/kansas-sports-wagering-bill-earmarks-80-of-state-revenue-to-pro-sports-stad
ium/.

5
“UNODC Global Report on Corruption in Sport.” Accessed April 25, 2022.
https://grcs2021.unodc.org/res/safeguardingsport/grcs/indexNEW_html/BROCHURE_CORRUPTION_SPO
RT_PROGRAMME.pdf.
Smith 3

of sports gambling such as addiction. Legal sports gambling also presents the issue of an increase

in addiction, but with regulations, rules, and law a state can lessen these risks.6 This current

situation is a lose-lose for the United States and individual states like it who are seeking to help

its population. The prohibition doesn’t stop people from sports gambling, it loses states revenue,

benefits organized crime, and puts a burden on the citizens of the state through a lack of

consistent regulation and support in the industry.

There are a number of different policy actors with their own framing when it comes to the

issue of illegal sports gambling and its negative effects. You have to consider whether the Kansas

community itself is in favor of prohibiting sports gambling, some might see it as immoral and

not want the state to profit from sports gambling in the first place. While others couldn’t care less

about gambling laws and are in favor of the revenue for the state, or they gamble themselves.7

This is important because it will decide what policy legislators will support. Both the industries

of sports and gambling itself will also have their view of the current conditions that illegal sports

gambling creates. In the Kansas City area specifically, we have seen local teams such as the

Royals and Chiefs come out side by side with casinos in favor of legalization because of its

ability to increase fan engagement and profit.8 There has also been a massive shift in the media,

6
Chóliz, Mariano. “The Challenge of Online Gambling: The Effect of Legalization on the Increase in Online
Gambling Addiction - Journal of Gambling Studies.” SpringerLink. Springer US, June 10, 2015.
https://link.springer.com/article/10.1007/s10899-015-9558-6.

7
Lin, Li-Chun. “Analysis of Resident Perceptions and Attitudes toward Gambling Development in
Kansas City.” ProQuest. ProQuest, 1999.
www.proquest.com/docview/304510842?pq-origsite=gscholar&fromopenview=true.

8
O’Malley, Andrew. “Kansas, Georgia Sports Betting Legalization Efforts Build Momentum.”
VegasSlotsOnline News, 7 Feb. 2022,
www.vegasslotsonline.com/news/2022/02/07/kansas-georgia-sports-betting-legalization-efforts-bu
ild-momentum.
Smith 4

research, and advocacy against the prohibition of sports gambling. All three of these important

actors in policy have begun to support a legalized but well-regulated sports gambling industry as

the best way to benefit the government and its people. What we currently have in Kansas is a

majority of the population either in support, or neutral to the idea of sports gambling legalization.

Policy

A bill that has successfully made its way through the Kansas Legislature seeks to solve

these above-mentioned issues. Kansas Senate Bill 849 was introduced on January 26th, 2022,

sponsored by the Committee on Federal and State Affairs, and seeks to amend the Kansas

Expanded Lottery Act (KELA) which would also “be a part of and supplement” the Kansas

Lottery Act (KLA). The amendment would expand these acts to allow for sports wagering by

“lottery gaming facilities” in the state. The Kansas State House has passed the bill and the Senate

has passed the bill with a few minor changes and sent SB84 to Governor Kelly’s desk. The Bill

estimates sports wagering could benefit the state with revenue of “$1.8 million in FY 2023, $6.0

million in FY 2024, and $10.0 million in FY 2025.” The revenue allocation is structured so that

revenue provides for provisions and funds in the bill first. The Attracting Professional Sports to

Kansas Fund will be used to finance future sporting venue construction in the state. With the

hopes of drawing new and existing teams to relocated to Kansas.10 Then the White Collar Crime

9
“Bills & Laws.” SB 84 | Bills and Resolutions | Kansas State Legislature. Accessed April 24, 2022.
http://www.kslegislature.org/li/b2021_22/measures/sb84/.

10
Tim Carpenter, Kansas Reflector April 2. “Kansas Sports Wagering Bill Earmarks 80% of State Revenue to Pro
Sports Stadium.” Kansas Reflector, April 7, 2022.
Smith 5

Fund receiving the remaining initial revenue. After those funds have maxed out, revenue will go

to the Lottery Operating Fund, then the State Gaming Revenue Fund, and “ultimately transferred

to the State General Fund at the end of the fiscal year.”11

The bill includes a number of sweeping changes to the KELA and KLA programs, with

the intent of fitting sports wagering into the two programs. Some, but not all, of the significant

changes are listed below.

The Bill Includes

- Kansas Lottery control over sports wagering decisions

- Sports Wagering Operations is compliant with KELA and KLA through a lottery

gaming facility manager who is contracted with the Kansas Lottery. Can use

licensed physical or online platforms.

- Provisions to limit compulsive and addictive gambling. Such as not allowing

managers to offer lines of credit.

- Allows for sports teams and marketing entities to enter into an agreement with a

licensed lottery manager “for the purpose of marketing sports wagering at the

primary facility of such team or marketing entity.” No manager, agent, or

employee of the sports team is able to carry out the duties of the lottery manager.

- Advertisements of sports wagering are allowed with specific regulations. Such as

no marketing to minors, requiring the inclusion of a toll-free number for gambling

https://kansasreflector.com/2022/04/02/kansas-sports-wagering-bill-earmarks-80-of-state-revenue-to-pro-sports-stad
ium/.

11
“Second Conference Committee Report Brief House ... - Kslegislature.org.” Accessed May 8, 2022.
http://www.kslegislature.org/li/b2021_22/measures/documents/ccrb_sb84_02_0000.pdf.
Smith 6

addiction, and prohibiting false and misleading advertisements on sports

wagering.

- Kansas Lottery has the authority to limit and restrict certain sports or events.

- Required Self-Restriction list that individuals can place themselves on to prevent

addictive and compulsive gambling.

- Would allow Tribal casinos to renegotiate agreements with the state and governor.

- Required age of 21 years old.

This bill uses a number of different policy implementation tools that overlap to ensure

sports wagering is conducted in a “safe”, efficient, and effective way for the state and other

actors involved. Regulation is used heavily for all actors, this includes regulations on sports

teams and organizations, gaming and casino managers, and regulations on individuals wishing to

wager on sports. The bill utilizes Government Management to create and maintain bodies that

are able to enforce the rules and regulations. The Kansas Lottery organization is a great example,

as well as the Kansas Racing and Gaming Commission. Another policy tool they may use

heavily after the implementation of this policy is the Taxing and Spending Power. This power

is a primary reason for the bill in the first place because the government's ability to tax Lottery

and Sports Wagering could drive millions in revenue. This could be fees and taxes on winnings

and wagers, or fees associated with applying for and keeping a license to operate. Spending can

also be directed to fund provisions in the bill that uses the revenue for a number of different

reasons in the sports and gambling industry. For example, there is the Attracting Professional

Sports to Kansas Fund, the White Collar Crime Fund, and the Problem Gambling and Addictions

Grant Fund. These are all funds that either capitalize on the benefits of legalization or attempt to
Smith 7

mitigate the risks associated. The bill also allocates money to existing funds and programs that

are affected by the bill. There are also financial negative consequences within the program to

ensure lottery managers and users follow regulations. Such as fines for not following a listed

procedure or rule.

Analysis

The Political Feasibility of a bill is always the most crucial aspect of deciding whether it

is a worthwhile policy choice to solve a problem. It does not matter how great the idea or its

effects if it never makes it into law. The SB 84 Authorizing sports wagering under Kansas

expanded lottery act has already passed the Kansas House of Representatives with an 88 to 36

vote count, and in the Senate with a 21 to 13 count. This shows the policy has been tested in both

the actual legislatures and that it is a bipartisan bill that both Republicans and Democrats can

find benefits in. Governor Laura Kelly has already signaled that she intends to sign the bill into

law when it arrives at her desk. Public reaction to the success of the bill in Congress has been

positive with many hoping for the launch and implementation of the program before next fall.

When attempting to gain support for a bill the perceived Effectiveness of the legislation is

an important factor. If the passing of a bill into law makes no significant change in a problem or

makes it worse it will be considered a failure. For gambling legalization in Kansas and SB 84,

the measure of effectiveness will be measured ultimately in terms of revenue and the ability to

attract sports organizations. This includes revenue directly to the state government through fees

and taxes, as well as revenue generated for local communities through new and existing teams.

The bill is projected to be able to pay for itself and eventually earn around $10 million in revenue

for the State of Kansas within three years if passed. If the bill is passed and able to maintain or
Smith 8

surpass this goal within the timeframe it will be considered successful. States that have legalized

sports gambling have seen an impressive amount of revenue generated so the bar is set high. If

sports legalization and the new laws are not able to attract a team like the chiefs, or successfully

pay for a new sports stadium I think the bill will be seen as a loss. However, Chiefs President

Mark Donovan has signalled that they are open to all options including a move to Kansas.12

The Equity of a policy is the third decisive measurement of its impact and success. A

policy that attempts to legalize sports gambling should achieve equity by ensuring everyone

benefits, and no one is made worse off. This is a policy criterion that can be worrisome because

of the nature of gambling, it can be addicting and cause both financial and mental distress to

some involved.13 Luckily, the act attempts to mitigate this risk through its no credit rules, Self

Restriction list, and multiple different funds aimed at treating and helping those with an

addiction. There is a provision in the Authorizing sports wagering under the Kansas expanded

lottery Act that does worry me though when considering equity. The provision is that the Kansas

Lottery has the authority to limit and restrict certain sports or events from sports gambling. My

worry is that this provision might be used in a way that takes the benefits of the act away from

certain teams, cities, and organizations.. If teams like the Chiefs and the Royals are the only ones

to benefit that leaves many other communities and teams without a fair share. There are

12
Brisco, Joshua. “Chiefs President: Chiefs Considering Move to Kansas for New Stadium Options.” Sports
Illustrated Kansas City Chiefs News, Analysis and More. Sports Illustrated Kansas City Chiefs News, Analysis and
More, March 29, 2022.
https://www.si.com/nfl/chiefs/news/kc-chiefs-considering-move-to-kansas-away-from-geha-field-at-arrowhead-stadi
um-in-kc-mo.

13
Latvala, Tiina. “Public Health Effects of Gambling – Debate on a Conceptual Model - BMC
Public Health.” BioMed Central, 9 Aug. 2019,
bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-019-7391-z.
Smith 9

numerous “lower” tier teams that I believe could benefit from the revenue. I do not think this will

happen though. There is also the issue of equity with the Attracting Professional Sports to

Kansas Fund that is included. Who decides where a new stadium will be placed in the State, and

what team will fill that space. For example minor league stadiums “can revitalise a city’s

downtown, but also act to concentrate redevelopment rather than create growth.”14 And major

stadium construction mostly just “redistrubutes” economic effects to the new region instead of

creating growth.15

Efficiency is key as well. The idea with this policy is “The introduction of a well

regulated and transparent gambling industry may serve greater protections than what is provided

by the law”16 with “law” referring to prohibition. This is why I see no other feasible alternatives

to SB 84 at our current time. Instead of keeping sports gambling illegal as a means to acheive

public safety and health because of its dangers. We should do what many states have done with

gambling (along with Marijuana and other drugs) and make it legal, but regulated so that the

State can have a say in the market. By being able to start regulating the sports gambling market,

the state will not only be opening new revenue streams but will be able to use this policy to

improve the market itself. There are regulations within SB 84, but these regulations serve to

14
“Minor Stadiums, Major Effects? Patterns and Sources of Redevelopment ...” Accessed May 8, 2022.
https://journals.sagepub.com/doi/full/10.1177/0042098018760731.

15
“Stadiums and Arenas: Economic Development or Economic Redistribution?” The Heartland Institute. Accessed
May 8, 2022.
https://www.heartland.org/publications-resources/publications/stadiums-and-arenas-economic-development-or-econ
omic-redistribution.

16
Shawhan, Robert. "Legalizing Federal Sports Gambling Laws: You Got to Know When to
Hold'em." Hastings Communications and Entertainment Law Journal, vol. 40, no. 1, 2018, p.
41-68.
Smith 10

protect and help the industry, not hinder sports gambling and render it difficult or impossible.

Things like licensing official lottery gaming managers, legal advertisements, and the millions of

dollars being invested, should result in the industry itself improving in both profit and consumer

growth in the state. If this bill is signed we will immediately see outside companies and casinos

associated with sports gambling investing in Kansas. This will be an efficient policy because it

allows for the sports gambling industry to operate within an open, legal, and regulated market

along with other states.

Smith 11

References

1. Bennett Conlin, SportsHandle ·. “Missouri House Committee Debates Sports Betting Bills.”
CDC Gaming Reports. Accessed May 8, 2022.
https://www.cdcgamingreports.com/missouri-house-committee-debates-sports-betting-bills/.
2. O’Malley, Andrew. “Kansas, Georgia Sports Betting Legalization Efforts Build Momentum.”
VegasSlotsOnline News, 7 Feb. 2022,
www.vegasslotsonline.com/news/2022/02/07/kansas-georgia-sports-betting-legalization-effort
s-build-momentum.
3. Shawhan, Robert. "Legalizing Federal Sports Gambling Laws: You Got to Know When to
Hold'em." Hastings Communications and Entertainment Law Journal, vol. 40, no. 1, 2018, p.
41-68.
4. Latvala, Tiina. “Public Health Effects of Gambling – Debate on a Conceptual Model - BMC
Public Health.” BioMed Central, 9 Aug. 2019,
bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-019-7391-z.
5. http://www.kslegislature.org/li/b2021_22/measures/documents/ccrb_sb84_01_0000
6. “Bills & Laws.” SB 84 | Bills and Resolutions | Kansas State Legislature. Accessed April 24,
2022. http://www.kslegislature.org/li/b2021_22/measures/sb84/.
7. Lin, Li-Chun. “Analysis of Resident Perceptions and Attitudes toward Gambling
Development in Kansas City.” ProQuest. ProQuest, 1999.
www.proquest.com/docview/304510842?pq-origsite=gscholar&fromopenview=true.
8. “First-Ever Global Report on Corruption in Sport Flags Urgent Need for Unified,
International Response to Corrupt Practices in Sport.” United Nations : Office on Drugs and
Crime. Accessed May 8, 2022.
https://www.unodc.org/unodc/press/releases/2021/December/first-ever-global-report-on-corru
ption-in-sport-flags-urgent-need-for-unified--international-response-to-corrupt-practices-in-sp
ort.html.
9. Marchi, Jake. “The Economic Impact of Legalized Sports Gambling.” repository.arizona.edu.
The University of Arizona., May 1, 2020.
https://repository.arizona.edu/handle/10150/651380.
10. Chóliz, Mariano. “The Challenge of Online Gambling: The Effect of Legalization on the
Increase in Online Gambling Addiction - Journal of Gambling Studies.” SpringerLink.
Springer US, June 10, 2015. https://link.springer.com/article/10.1007/s10899-015-9558-6.
11. Chóliz, Mariano. “The Challenge of Online Gambling: The Effect of Legalization on the
Increase in Online Gambling Addiction - Journal of Gambling Studies.” SpringerLink.
Springer US, June 10, 2015. https://link.springer.com/article/10.1007/s10899-015-9558-6.
12. Wohlenberg, Ernest H. “Recent U.S. Gambling Legalization: A Case Study of Lotteries.” The
Social Science Journal. No longer published by Elsevier, July 16, 2002.
https://www.sciencedirect.com/science/article/pii/036233199290031C.
13. Burkhart, N., and Dylan Welsh. “The Legalization of Sports Gambling: An Irreparable Harm
or the Beginning of Unprecedented Growth?: Semantic Scholar.” undefined, January 1, 1970.
https://www.semanticscholar.org/paper/The-Legalization-of-Sports-Gambling%3A-An-Irrepar
able-Burkhart-Welsh/c43971797baabd9dd21e137fc1ced8f5c727ebe7.
14. Tim Carpenter, Kansas Reflector April 2. “Kansas Sports Wagering Bill Earmarks 80%
of State Revenue to Pro Sports Stadium.” Kansas Reflector, April 7, 2022.
Smith 12

https://kansasreflector.com/2022/04/02/kansas-sports-wagering-bill-earmarks-80-of-state-
revenue-to-pro-sports-stadium/.
15. Brisco, Joshua. “Chiefs President: Chiefs Considering Move to Kansas for New Stadium
Options.” Sports Illustrated Kansas City Chiefs News, Analysis and More. Sports
Illustrated Kansas City Chiefs News, Analysis and More, March 29, 2022.
https://www.si.com/nfl/chiefs/news/kc-chiefs-considering-move-to-kansas-away-from-ge
ha-field-at-arrowhead-stadium-in-kc-mo.
16. “Stadiums and Arenas: Economic Development or Economic Redistribution?” The
Heartland Institute. Accessed May 8, 2022.
https://www.heartland.org/publications-resources/publications/stadiums-and-arenas-econ
omic-development-or-economic-redistribution.
17. “Minor Stadiums, Major Effects? Patterns and Sources of Redevelopment ...” Accessed
May 8, 2022. https://journals.sagepub.com/doi/full/10.1177/0042098018760731.
18.