Kansas Experiences Ups and Downs during Initial Year of Legalized Sports Betting
Kansas Sports Betting blooms swiftly in the Heartland
In just a mere three months, Kansas, a state that once lagged behind neighboring Missouri, has launched its legal sports betting scene. Earlier this week, the Kansas Lottery unveiled the numbers for August, marking the end of the Sunflower State's first year of sports betting operations.
Sporting twelve months of data, the state's initial foray into legalized gambling is impressive, boasting four brick-and-mortar sportsbooks and six mobile ones, with operators processing an astounding $1.85 billion in bets, generating a gross revenue of $166.4 million, and posting a 9% hold.
The state tax collector reaped close to $7 million, as operators can deduct promotional play and carry over monthly losses when calculating adjusted gross revenue. The $60 million in AGR accounts for 36% of the gross revenue, impacted by aggressive introductory offers from mobile operators during the September launch and again in February for Super Bowl LVII.
However, Kansas's heavy wagering on the Kansas City Chiefs as they stormed past the Philadelphia Eagles in February contributed to the state being one of just three to post a monthly loss in gross revenue thus far in 2023.
Cory Thone of the Kansas Lottery expressed satisfaction with the first year, "Kansas's sports betting debut was a resounding achievement. We managed to launch in time for the professional football season, and the year progressed without major complications. Players had a grand time wagering on their favorite teams, and we're very excited to kick-off the new sports season in the Sunflower State!"
Financials: Winners and Losers
Online Promotions and Revenue
States where operators can offer promotions aggressively are places where DraftKings, FanDuel, and BetMGM can showcase their deep pockets to attract customers. Kansas was no exception, as these titans of the mobile sports betting world accounted for 92.5% of the nearly $91.8 million in credits they lavished upon Kansas citizens from September through August.
DraftKings led the group in both handle ($753.5 million) and gross revenue ($67.8 million), but it also led in promotional outlay at almost $38.7 million. FanDuel followed closely behind, spending $25.3 million, which represents less than half its $56.1 million gross revenue. BetMGM was prepared to spend to secure third place in Kansas, as its promotional outlay of $20.9 million nearly matched its $21.9 million in gross revenue claimed.
Two mobile books in the process of rebranding, Fanatics taking over PointsBet, and PENN Entertainment switching from Barstool Sportsbook to ESPN BET, make for intriguing developments in the Sunflower State's sports betting scene. PENN can utilize the top retail sportsbook at Kansas Speedway to challenge Caesars Sports for the No. 4 spot, while possibly intensifying promotional play. Fanatics faces a more challenging road, as PointsBet accounted for only 1.2% of the mobile handle, with a relatively light promotional spend of $1.2 million.
Retail Wars
PENN should maintain its dominance in the brick-and-mortar scene, even with its transition from Barstool to ESPN. Kansas Speedway generated 76% of the $81.2 million handle in the first year and close to 70% of the $4.6 million in gross revenue. It also took the hardest hit in February, reporting payouts of more than $1.8 million above the $8.2 million in accepted bets. PENN recovered from this deficit in three months' time but now boasts a 2.4% hold through the first eight months of the year, claiming $845,000 from $34.9 million in handle.
The betting public has fared relatively well when venturing to Kansas's four retail sportsbooks. The collective hold was 5.7%, significantly below the industry standard of 7%, and each location had at least two monthly losses.
For pinpoint figures on Kansas's sports betting performance during its inaugural year, it's best to consult the official reports from the Kansas Racing and Gaming Commission or request information directly from them. Alternatively, reports from entities such as the American Gaming Association and state gaming commissions may provide relevant data or references to Kansas's market performance.
- The influx of major players like DraftKings, FanDuel, and BetMGM in the Kansas sports-betting market, driven by aggressive online promotions, has contributed to a significant portion of the industry's revenue.
- In terms of gross revenue, FanDuel trails behind DraftKings, but its promotional spend is substantially lower, at less than half of its earnings.
- The rebranding of two mobile sportsbooks, Fanatics taking over PointsBet and PENN Entertainment switching from Barstool Sportsbook to ESPN BET, introduces intriguing developments that could intensify promotional play and alter the competitive landscape in Kansas's sports-betting scene.
