Lottery director and operators describe Kansas’ tethered model and the marketplace ahead of 2027 contract expirations

Kansas Lottery leadership and casino managers defended the current model for sports wagering while acknowledging tradeoffs and the upcoming contract timeline.

“We are in the third year of the existing sports wagering contracts … Those will expire the September 1, 2027,” Lottery Director Steven Durrell told committee members, stressing the state had limited time to stand up a regulated market after the 2022 law and that the owner-operator structure helped get platforms running quickly.

Why it matters: Members asked whether the state could change to a model in which the Lottery contracts directly with mobile platforms (the approach used in some other states) or whether the state should move away from tethering to casinos. Director Durrell and casino representatives said each option carries tradeoffs: direct contracting can yield a larger state share in some states, but it also changes who makes capital investments, who markets locally and how data and geolocation are managed.

Casino testimony: Ryan Schultz, vice president of governmental affairs for Boyd Gaming, described how the tethered model is intended to preserve a “brick-and-mortar” economic footprint — the retail sportsbook and ancillary hospitality that bring hotel stays, food-and-beverage sales and local employment. He said Kansas Star has invested capital and generated “nearly $640,000,000 of revenue for the state of Kansas and for local governments” since opening, and that retail books support local jobs even though the majority of bets are placed online.

Platform economics and taxes: Industry witnesses (platform representatives and a trade association attorney) told the committee that the sports-wagering business runs on thin operating margins, that hold rates vary by event and month, and that promotional deductions and vendor and technology costs must be covered from retained margin. The trade group urged caution about large tax increases or a single-operator monopoly; it said higher tax rates or removing competition can reduce promotions and consumer incentives and encourage migration to offshore or unregulated alternatives.

Contract length and uncertainty: Casino witnesses told the committee the industry prefers longer-term certainty because investment in brick-and-mortar and in marketing is significant; Lottery officials said the five-year term was a legislative choice to preserve flexibility and allow adjustment after a few years of operation.

Questions for future policy: Committee members requested a closer look at possible contract architectures and asked staff to analyze models used in comparable states (for example, the lottery-direct contracting approach used in some states and the revenue-splitting models in others) and the likely effect on state receipts if Kansas changed models in 2027.