Kansas Lottery presents revenue gains, iLottery expansion and contract changes; committee concurs with LBC recommendations

The Committee on General Government Budget heard a detailed presentation from Molly Pratt, fiscal analyst for the Legislative Research Department, and Steven Durrell, executive director of the Kansas Lottery, on the lottery's revised 2025-26 budget request, revenue estimates and program changes. The committee later voted to concur with the Legislative Budget Committee's (LBC) recommendations for fiscal years 2025 and 2026.

Molly Pratt told the committee the Kansas Lottery operates under Article 15 of the Kansas Constitution and the Expanded Lottery Act; she noted statutory and contractual arrangements that govern how revenue from sports wagering and casino management is shared. Pratt said the lottery's revised 2025 revenue estimate rose roughly $14.8 million above the approved amount, and she listed several components of the revised request, including a supplemental personnel pay request of $165,191 (from the lottery operating fund) that the LBC deleted. Pratt also described $3.7 million in increased expenditures tied to an expanded "PlayOn" loyalty program administered under contract with Pollard Banknote Limited, and two additional FTE requested for 2025 tied to that program.

Kansas Lottery Executive Director Steven Durrell described fiscal-year results and operational changes. Durrell said traditional lottery net sales for fiscal 2024 totaled nearly $338 million and that draw-game sales and instant-ticket sales remain strong. He said the agency has rolled out self-service vending machines (about 370 machines currently) and a new instant-game product called Fast Play, which produced about $2.6 million in sales since its introduction. Durrell also described a contractual shift in June 2024 in which Scientific Games took over warehouse shipping and ticket distribution; the agency reported the change reduced shipping costs and led to the transfer of six Lottery warehouse employees to Scientific Games. Durrell said those employees "are actually making more money now working for Scientific Games doing virtually the same job" and that the vendor model allows bonuses and other incentives not available under state employment rules.

Pratt and Durrell discussed gaming facility management fee allocations. Pratt explained that, under the applicable Kansas statutes and existing contracts, lottery gaming facility managers retain a substantial share of casino revenue (an example figure cited was 73% retained by managers for the four state-owned casinos under the applicable contractual arrangement). Pratt said revised revenue estimates—an October upward adjustment—raised casino revenue and retained amounts for facility managers, and that sports wagering revenue estimates also increased, with a $8,000,000 upward revision for sports wagering in the October estimate. Pratt explained transfers required by statute, including set amounts for veterans, the community crisis stabilization fund, problem gambling grants, the Economic Development Initiatives Fund, the Correctional Institutions Building Fund and juvenile alternatives.

Committee members pressed for additional detail on several items. Representative Amex questioned the treatment of six employees and whether the personnel count on LBC tables (95 falling to 91) had been updated; Pratt explained that six employees moved to the vendor and the lottery added two FTE, for a net 4-FTE decrease reflected as 91 total. Representative Hubert asked for comparative data on sports-wagering revenue versus other states; Durrell said staff are preparing that analysis and noted the lottery is mid-term in five-year contracts with sports-wagering operators and already beginning renegotiation conversations.

After questions, Representative Amick moved, and Representative Alhavison seconded, concurrence with the LBC recommendations for the Kansas Lottery's 2025 and 2026 budgets; the committee approved the motion.

All direct quotations in this report are drawn from the meeting transcript as attributed to the speakers listed below.