It's officially safe to say the legalization of sports betting in Kansas has been a resounding success. You could have already said, of course. But the statement is undeniable after Kansas sports betting revenue reportedly tripled during the month of November.
The Kansas State Lottery—which oversees sports gambling integration, operation and compliance—recently released their earning report for November 2022. And the data is staggering. Here's what the earnings report found, according to Tod Palmer of NBC 41 in Kansas, Missouri:
"Kansas took in nearly three times as much in tax revenue from sports gambling in November as it had in the first two months since its legalization...The total amount of settled wagers handled by Kansas retail and online sportsbooks dipped for the first time last month to nearly $186.4 million, a drop of nearly 2% from October. But taxable revenue—which was less than $1.3 million in September and barely $1.4 million in October—shot up to more than $8 million in November. That means Kansas earned $795,784 as its share of sports-wagering revenues in November. The state share for September and October was only $270,706 combined."
Making sense of this increase can be difficult. November is a big month for betting odds on NFL football, thanks to their Thanksgiving Day showcase. But that alone cannot account for a huge uptick from September and October.
Understanding what does factor into the increase is mission critical. After all, Kansas needs to know whether they can expect more gains in the months to come or if this was a one-time outlier. So, what's the deal with the sports betting market in the Sunflower State? Let's find out.
Sports Betting Promotions Dragged Down Kansas Sports Betting Revenue
Whenever states launch online sports betting, gaming operators flood the public with highly favorable promotional bonuses. Companies like DraftKings, FanDuel, BetMGM, Caesars and many more know how important it is to capitalize on the initial wave.
Bagging first-time clients ensures a certain level of loyalty—and therefore returning business. Sure, plenty of sports bettors use multiple sites or will leave one place for another. But most customers simply, as they say, "dance with the one they came." That increases the importance of convincing them to sign up when they first make the move. And while there are new users creating accounts every day, sports betting launches are especially busy, because the whole process is new and exciting.
Anyway, as part of legalizing online sports betting in Kansas, the state agreed not to tax gaming operators on wagers placed using promotional money. This dramatically altered the bottom line through September and October.
“Many of the platform providers have offered free bet sign up bonuses and other promotional offers through this launch period to acquire new players and otherwise establish a player base,” the Kansas Lottery said in an email to KSHB 41. “While the winning prizes have generally been in line with industry expectations, the promotional wagers have been significant compared to overall play in this period.”
Knowing this, it makes sense that Kansas sports betting revenue was lower during the first two months of operations.Statistically speaking, most sports bets are now placed online. And customers are obviously going to gamble their "free" money before chiseling into their own cash stores.
One Other Factor Hurt Kansas Sports Betting Revenue in September and October
It wasn't just promotional bonuses adversely impacting Kansas' bottom line in September and October. It was competitors outside the state.
See, people in Kansas were already betting on sports. And to do so, they were likely using one of the most reputable and top reviewed online sportsbooks located offshore. These gaming operators have been around forever and make it easy for almost anyone in the United States to wager on sports. Fewer people will use them as consistently when their state legalizes sports betting, but they won't stop cold turkey. Bettors already have money in their accounts. And they might just feel more comfortable using a site they've frequented before.
Whatever the reason, Kansas sports bettors aren't leaving their previous linemakers right away. That takes time. In fact, it's probable that Kansas is still losing plenty of money each month to more established offshore alternatives. It just isn't as big of a deal anymore now that promotional spending has started to normalize domestically.
Will Kansas Sports Betting Revenue Continue to Climb?
Immediately, we should all expect Kansas sports betting to remain on the ascent. Not only have many gaming operators burned through the most popular time for promotional bonuses, but Kansas sports betting organically increases in popularity the longer its around. The next couple of months, specifically, should be huge. Like most others, Kansas residents will be chomping at the bit to bet on the NFL playoffs and college football bowl games.
Long term, though? That's a different story.
Kansas sports betting revenue is in imminent or distant danger of falling off a cliff. Let's make that clear. But the scale of their current growth may soon incur some pullback. For now, a refusal to legalize sports betting in Missouri has significantly helped Kansas. They are getting tons of business from Missourians willing to make the short drive across state lines.
But while this is a fairly lucrative revenue stream for now, it's also a temporary one. Many expect Missouri to approve a legal sports betting bill in 2023. That means the Show-Me State could have their own sports gambling infrastructure up and running by sometime in 2024. When that happens, Kansas will most likely face a dip in tax-revenue profit.
For now, however, Kansas sports betting is on the meteoric rise—and not on an immediate track to slow down.
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