Kansas Sports Betting Headed for Big Changes

The Kansas sports betting market may be on the verge of getting more expensive…for operators.

As other states start raising the tax rates for licensed sportsbooks, The Sunflower is considering doing the same. A confluence of circumstances are contributing to the consideration. Most notably, though, state legislators are not happy with the revenue being generated from sports betting in Kansas.

According to the Kansas Reflector, The Sunflower State ranks 29th out of 33 states in online sports wagering revenue per $1 million wagered. That does not quite square with the market size. Though Kansas is 34th in total population, it has more to offer than many other states as a sports hotbed. From a host of elite collegiate programs to their close proximity to NFL, MLB and NHl teams in Missouri, interest across a variety of leagues and events is high.

“This is [an] absolute failure from my perspective,” Representative Francis Awerkamp told the Kansas Reflector’s Anna Kaminski. “What am I not seeing? How can you say that this is a success story when we’re basically one of the worst states in the country?”

Going with the “absolute failure” narrative may stretch the boundaries of the situation. Kansas sports betting has yielded $7.6 million in tax revenue through its first six months of reporting in 2025. That puts them on track for $15.2 million revenue, which beats out last year’s mark of $12.8 million by nearly 20 percent.

John Pappas, the state advocacy director for iDevelopment and Economic Association, countered Awerkamp’s sentiments via Kaminski. He argues that Kansas sports betting revenue is disproportionately high relative to its population size. Still, when you start to dig into the data, you can understand some of the frustrations from state legislators.

Here’s Why Legislators Want to Raise the Kansas Sports Betting Tax

Kaminsky explains what as so many policymakers attempting to rethink the Kansas sports betting tax:

“During the 2025 session, the Legislature implemented a last-minute moratorium on the state approving any contract renewals for online sportsbooks. A hearing Monday was the first public discussion of potential changes to Kansas’ sportsbook market since then. Legislators toyed with the idea of rejiggering the formula that dictates the allocation of sports betting revenues at a Monday hearing in Topeka. Of the $2.7 billion in wagering revenue in fiscal year 2025, which began in July 2024 and ended in June, Kansas retained about $17 million, or 0.6 percent, according to state data.”

This gets to the root of Awerkamp’s concerns, as well as the overall issue for other lawmakers: the Kansas sports betting tax, which clocks in at 10 percent, isn’t giving the state a large enough piece of the pie. It’s not hard to see why, either.

Right now, The Sunflower State taxes operators at a 10 percent clip for both online and retail sports betting services. This 10 percent figure is low overall, but it’s especially low relative to online sports betting in the United States.

Even when states offer lower rates, they tend to do so only for on-site sportsbooks. Mobile sports betting is a separate matter. Market size does not tend to matter, either. The New York online sports betting market is subject to a 51 percent tax rate, but so, too, is the Oregon online sports betting market.

Legislators May Have Leverage to Raise Kansas Betting Tax

While sports-betting tax hikes are not uncommon, they seldom come without push-back. Operators want to limit their overhead as much as possible. They will counter-campaign against tax increases. And when they fail, they will sometimes pass those added expenses onto the consumer via transaction fees or betting minimums.

Kansas nevertheless has the leverage necessary to implement a tax hike. The state’s contracts with various sportsbooks are set to expire in 2027. Legislators are not only using the threat of agreeing to deals with other operators in the future to push for tax increases. They have actually reined in the power of the Kansas Lottery, which is tasked with overseeing The Sunflower State’s sports betting processes.

As of right now, the state lottery is banned from renegotiating contract extensions with any Kansas online sportsbooks. That is clearly an attempt to drum up support and/or acceptance of a tax hike.

Whether it’s enough is a separate matter. This extension ban will apparently end in 2026. As many experts have noted, most Kansas sports betting contracts for online operators are not set to expire until 2027. The sportsbooks could elect to wait out this window, and then hope to reach a more favorable deal with the state’s lottery commission.

How Will This All End?

With that said, refusing to discuss tax increases with the state isn’t without risk. There is a lot of time separating us between now and the summer of 2026. Kansas legislators could look to extend the negotiation ban during their next round of meetings. If sportsbooks let this gridlock drag out that long, they won’t have as much time to broker a new agreement prior to contract expirations. This, in theory, arms them with less leverage to bring to the table. And that, in turn, could leave them subject to a higher tax rate than they’d received if they just engaged now.

If we had to guess, there will be some kind of Kansas sports betting tax increase prior to the next batch of contracts being signed. This is to some extent a natural cycle in a newer industry. After the first few years, all of the involved parties re-evaluate their position, and what comes next.

Unless sportsbooks in Kansas do not see the juice they’re receiving being worth the current squeeze, they will ultimately pony up at least a little bit more to keep business humming along as usual.

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