August 2023 turned out to be a pretty darn good month for Kansas sports betting, according to the latest date released by the Kansas State Lottery. It also happened to be a telltale month for the future of gaming in The Sunflower State.
This, of course, isn’t the case every month. But sports betting in Kansas just wrapped up its first year of operation. Even if the trends and takeaways we spot now aren’t permanent, they will shape what’s to come in 2024 and probably beyond.
Kansas Sports Betting Revenue Rises Demonstratively in August 2023
The 12th month of Kansas sports betting proved to be quite lucrative when looking at their handle. Though the total profit was down, there was a ton of activity at sportsbooks.
Kansas totaled $94.42 million in bets placed for the month of August. That comes to an 18.4 percent increase from the $79.7 million worth of bets submitted in July.
This increase comes on the heels of state regulators confirming that Kansas obliterated their first year sports betting revenue projections. Initial forecasts had The Sunflower taking home $1.8 million in total tax revenue from sports gambling by the end of Year. In reality, Kansas has earned over $6.5 million in sports betting revenue. That’s more than three times the original projection. And it can only be considered a good harbinger for Year 2.
State Regulators Expect Sports Gambling Profits to Increase in Year 2
Success in Year 1 of legal Kansas sports betting can be viewed in two ways. Shattering projections could be used to forecast another lucrative tax-revenue windfall in Year 2. Or state regulators could brace for a dip, knowing that the novelty of sports gambling is potentially wearing off among residents.
Kansas is preparing for the former. Or at least, they should be.
Sports betting revenue in the first year can oftentimes be lower than people expect. The best online sportsbooks in the United States run aggressive promotions whenever a new market legalizes mobile wagering. And those bonuses are considered tax deductible. That means sportsbook operators are typically able to report lower amounts of revenue off which they’re taxed.
Even though they beat out their Year 1 projections, Kansas is no exception to this calculus. Sportsbooks in Kansas should have fewer deductions next year now that they’re not generating as many new clients each and every month. That’s good news for the state’s overall share of bets placed.
Granted, Kansas still needs existing customers to continue making wagers at their current rate to feel the full benefit. That can get a bit dicey. Like we said before, the novelty of sports gambling can wear off after the initial high. But as August 2023 revenue reporting shows, the state’s interest hasn’t subsided.
Plus, unlike certain other markets, Kansas isn’t in imminent danger of losing their out-of-market revenue stream. At present, sports betting in Missouri remains on a slow, uncertain track. Kansas, a direct neighbor, will continue to glean business from Missourians who want to wager on sports. As long as the revenue pipeline is open, Kansas sports betting profits could always wind up being in better-than-expected shape at the end of every year.
Kansas Online Sports Betting is More Popular Than Ever
Finally, and perhaps most critically, the latest Kansas sports gambling revenue reports cast a spotlight on the state’s top betting method. Not surprisingly, this honor belongs to mobile wagering. That’s the case for every state offering online sports betting. Retail gambling seldom outpaces mobile business. In fact, last year, somewhere between 75 and 80 percent of all legal wagers placed were submitted via online operators.
However, even by those lofty standards, the share of Kansas’ business that gets funneled through mobile operators is abnormally large.
According to the Kansas State lottery, $90.59 million of August’s $94.42 million sports betting handle came from online sportsbooks. That’s nearly 96 percent of the state’s entire sports betting business.
This is both good news and bad news. On the one hand, it’s clearly good that Kansas legalized online sports betting as part of their rollout. It has become an essential for regions looking to maximize their revenue potential. Other states are currently suffering because they decided to legalize only in-person wagering and haven’t yet expanded their gaming laws to license online operators.
On the other hand, casino revenue in Kansas is on the decline. In total, the state’s casinos reported a 1.56 percent decrease in August revenue compared to last year. That’s not a massive dip, but it’s part of a larger trend. Only one Kansas casino reported a year-over-year increase last month.
Is the Current Kansas Sports Betting Model Sustainable?
People tend to get concerned when they see so much revenue tied to one aspect of a business. This raises the question: Is Kansas online sports betting too popular for its own good? And should the state be concerned with the potentially ebbing casino revenue?
The short answer: Everything’s fine. The longer answer: Everything’s fine, everything will continue to be fine, and this is all merely part of an industry trend.
Online sportsbooks are going to dominate the scene from hereon. That’s the world we live in. Make no mistake, there will come a time when it’s perfectly normal, if not entirely expected, for 96 percent of a state’s sports betting handle to come online.
This doesn’t necessarily mean that Kansas should be concerned about slumping foot traffic at their retail operators. Alienating that revenue stream can damage the bottom line. But it’s also too soon to declare the Kansas casino industry on an indefinite downturn.
Things can be done to try re-fortifying the business. Maybe Kansas decides to open a massive, state-of-the-art retail sports betting location, like so many other states have done. Or maybe they just raise the tax rate for online sportsbooks. That would offset any discrepancy in on-site revenue projections.
Overall, certain officials (and industry experts) just seem a little taken aback at how quickly the online sports betting market in Kansas ascended to the top of the transactional pecking. That is understandable. It is not, however, cause for concern. Financially speaking, the future of sports betting in Kansas looks incredibly bright.
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