The most recent Kansas sports betting revenue reports have been released, and the results are bound to surprise plenty of people.
According to the Kansas Gaming commission, the Kansas Chiefs' Super Bowl victory last month led to the state earning a record low in tax revenue. Just how low? Well, Kansas apparently walked away with just $1,134 in sports betting tax revenue for the month of February.
For context, Kansas sports betting revenue doubled during the month of December, bringing in more than $1 million of total profit. This naturally raises the question: How did sports betting in Kansas actually get hurt by the local team winning a championship? We've got the answer.
Here's How the Chiefs Super Bowl Victory Lowered Kansas Sports Betting Revenue
Though the Chiefs play in the state of Missouri, their proximity to Kansas makes them the team of choice among local sports fans. This means interest heading into the Super Bowl was at a critical mass. That, in turn, resulted in plenty of wagers being placed in the lead-up to the big game.
This suggests Kansas might make more money than usual. After all, more bets equals more profit. Right? Wrong. It turns out that so many people bet on the Chiefs to win the Super Bowl that many bookies ended up paying out way more than they brought in.
Residents in Kansas bet a total of almost $25 million on the Super Bowl, per Legal Sports Report. Of those wagers, about 80 percent of them were either on the Chiefs to beat the Philadelphia Eagles or on Patrick Mahomes to win Super Bowl MVP. Since both of those outcomes wound up hitting, sportsbooks paid out a combined $39 million to everyone who invested in Super Bowl odds. That represents a $14 million deficit relative to the $25 million in wagers they processed.
Why Did Kansas Still Make Money Off Sports Betting in February?
If Kansas sportsbooks combined to pay out more money than they made, how did the state still turn a profit? The answer is twofold.
Unique tax policies allow licensed operators to "deduct monthly promotional spending" from their revenue. That's how DraftKings, in particular, showed a loss during February, according to Legal Sports Report. They deducted more than double their hold ($3.12 million), so they weren't on the hook for a contribution to Kansas' sports betting revenue.
However, sportsbooks that turned a profit during the month of February still had to send money the state's way. So while there could be more lean months for Kansas sports betting revenue down the line, the state will always come out as a net positive as long as one odds operator turns a profit.
Of course, "lean months" will not be the expectations for legal Kansas sportsbooks moving forward. Promotional spending will eventually slow down. Many users are still betting with first-time bonuses they received when Kansas online sports betting went live this past fall. While the best online sportsbooks always offer promotions and bonuses, they typically aren't as lucrative as the initial giveaways at sign-up.
It isn't clear how long the promotional fallout from the debut of Kansas sports betting will last. Odds are, though, we will see licensed sportsbooks deduct smaller promotional spending amounts by the start of 2024.
Which Kansas Sportsbooks Made Money Off the Super Bowl?
The only sportsbooks in Kansas with a net positive gross gaming revenue for the month of February were FanDuel ($2.15 million) and PointsBet ($117,856). Due to the tax loophole we referenced earlier, though, FanDuel was the lone operator who paid into the state's tax revenue.
Meanwhile, three of the licensed sportsbooks in Kansas finished with a net negative gross gaming revenue. BetMGM, Barstool Sportsbook and Caesars "paid out more in winning wagers" than they accepted.
Don't go worrying about the future of these companies, though. Big-time sportsbooks are prepared for months like this—especially when the most popular team in the state in which they operate is plays for a championship.
Plus, pretty much every sportsbook in Kansas has enjoyed record-setting revenue streams each month since legal betting debuted all the way back in September.
Online Sports Betting in Kansas Remains a Gigantic Hit
Perhaps you're skeptical Kansas will continue to break sports betting revenue records as the months start to normalize and even as promotional spending dwindles. Surely the novelty of online sports betting is beginning to wear off on Kansans.
Except it's actually not.
Around $202 million in total legal sports bets were placed in Kansas during the month of February. To be clear: This incorporates all sports and not just the Super Bowl. Roughly 96 percent of that money—$196 million—was processed with an online sportsbook. That is actually above the national average in the USA, which hovers somewhere between 75 and 85 percent.
This is not particularly surprising when you dig into the details. Kansas does not have a ton of brick-and-mortar sportsbooks; there are only four casinos inside the state. And then, of course, they're still riding the promotional boom. All of the top reviewed online sportsbooks rolled out the red carpet when the state's betting doors opened in September. Even if certain people in Kansas prefer the on-site experience, they would be hard-pressed to pass up the chance to capitalize on first-time online bonuses totaling 100 percent and sometimes more.
All of which is to say: The future of online sports betting in Kansas remains blindingly bright—especially when one of their closest neighbors, in Missouri, has yet to legalize gambling themselves.
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