A battle for the Kansas City Chiefs has become part of sports betting legislative efforts in Kansas and Missouri.
At a Senate Appropriations Committee hearing on Wednesday, lawmakers discussed not allowing teams that leave the state to maintain rights to a Missouri online sports betting skin.
The topic spawned from comments made by Kansas City Chiefs president Mark Donovan last week at the NFL’s annual meeting. Donovan said that, among other options, the team is considering stadium proposals to move across the border into the Kansas side of Kansas City.
Days later, the comments sparked a surprise amendment in a Kansas sports betting conference committee to put 80% of tax revenue from sports wagering into a fund to finance a stadium for a professional sports team moving to Kansas.
In Wednesday’s Senate committee discussion of a sports betting proposal passed by the House, Chiefs vice president of civic affairs Anne Scharf addressed the comments.
Committee members want assurances from the Chiefs
Earlier this year, Missouri sports teams and casinos joined together to pitch sports betting bills. The House passed the proposal. It also got sponsors in the Senate, including committee chair Rep. Dan Hegeman.
When a team that has played in two of the past three Super Bowls asks for something, lawmakers usually oblige. But committee members weren’t feeling as friendly toward the Chiefs on Wednesday.
“So, if we helped you make this money, will we be guaranteed you won’t leave us,” asked Sen. Barbara Anne Washington. Washington represents Missouri’s ninth Senatorial District, which includes Arrowhead Stadium.
Scharf explained that the team remains committed to its lease agreement at Arrowhead, which runs another nine years.
“Our first step is to consider what’s possible at Arrowhead,” Scharf said. “It’s very special to the Hunt family. It’s very special to the community. We know the community has done a lot to support it up until now. It’s 50 years old, so we have to do our homework. Nothing that came up this past week was new … “
That’s when Washington interrupted and said:
“It’s new to us because the old man, bless his soul, Mr. Hunt, would have never said that he would leave us. So we just want to put that on the record that we love the Chiefs and we want the Chiefs to be committed to us. Or possibly also give us $790 million, which we would rather have the team.”
Changing skin language to address Chiefs comments
The joint proposal provides six Missouri professional sports teams with one online sports betting skin each. Casinos can have up to three skins, with a maximum of six per casino company.
Sen. Denny Hoskins said his concern about what happens to the rights to this skin if a team leaves the state goes beyond the Chiefs. He brought up the St. Louis Rams moving back to Los Angeles.
“I use the Chiefs because of some of the rumors and quotes that have been made, but this could apply to any sports team,” Hoskins said.
He asked if the Chiefs would oppose attaching a skin to a venue or adding a stipulation tying a skin to a team that plays the majority of its home games in Missouri. Scharf said they would not.
“If the team were to leave, our understanding would be that the skin would need to be addressed in that new state,” Scharf said. “Right now, we’re in Missouri and we understand that the skin would be contingent on that.”
Hegeman said the committee would work to tighten up the language to make sure that the skins go to teams based in Missouri.
Missouri sports betting tax rate still an issue
Despite previous Senate committee discussion on increasing the tax rate, the House surprisingly lowered the tax from 10% to 8% in a floor amendment.
House sponsor Rep. Dan Houx admitted the decrease dropped Missouri’s annual revenue projections from $15 million to $10 million in a fiscal note.
This compares to $163 million in the fiscal note for Hoskins’ SB 643. Hoskins’ sports betting bill contains a 21% tax rate and parlay bets allowed through lottery retailers.
“If we would pass this bill with an 8% tax rate and the provisions that are in there, we would be giving up about $153 million in tax revenue to the state,” Hoskins said. “That gives me some cause for concern.”
Todd George from Penn National Gaming defended the 8% tax rate. However, he admitted it would be the third-lowest of any state in which Penn operates.
“Coming to the game a little bit late in Missouri, it would be beneficial to have a somewhat lower tax rate so we can be more aggressive from a marketing standpoint to convince people to stay here in Missouri and not go across the borders.”
Hoskins referenced the 20% tax rate in Tennessee. Jeremy Kudon of the Sports Betting Alliance said his sportsbook operator clients don’t have to enter into partnerships in Tennessee. But the Missouri legislation requires them to partner with a local casino or professional sports team.
“That partnership will ensure that local businesses in Missouri actually get a portion of the revenue generated from sports betting without having to incur the costs associated with launching a sportsbook,” Kudon said. “And so the Cardinals don’t have to launch a sportsbook and pay for data and pay a federal excise tax. They can just enter into a deal with one of my clients.”
Price of skins also questioned
The House increased the application fee for an interactive sports wagering platform license from $100,00 to $150,000.
Hoskins described online skins as golden tickets that should cost more. He brought up the $100 million deal the Chicago Cubs signed with DraftKings.
George pointed out this arrangement had nothing to do with a skin. Professional sports teams don’t get skins in Illinois. It was simply a marketing agreement between DraftKings and the Cubs that runs over 10 years.
St. Louis Cardinals president Bill DeWitt III added that market access in Missouri doesn’t have that sort of value because there are up to 39 skins available and not that many operators looking to enter the market right away.
“I think market access is really just a way for us as teams to play a role in deciding who our fans should be exposed to marketing-wise,” DeWitt said. “And I think we as teams will experience an uptick in sponsorship revenue for those coming into the market able to reach our fans. But nowhere near that scale. This is not like a windfall awarding of a giant asset in terms of skins that immediately have hundreds of millions of dollars in value.”
Player associations rep makes requests
Jon Dalton, a lobbyist representing the player associations of all the major sports leagues, provided the committee with language they would like to see added to the bill.
The asks included:
- Protecting the athletes’ personal biometric data.
- Defining covered persons to include not only athletes but their families, umpires, athletic trainers and others associated with sporting events.
- Protecting those individuals through a clear definition of what is prohibited conduct under the bill.
- Including the player associations within the definition of a sports governing body.
“By establishing a regulatory process that includes the players associations along with the sports wagering operators and the leagues in those critical areas, the system will be better equipped to protect the integrity of the sport and safeguard those that are the subject of gaming activities and the associated pressures that can accompany sports wagering,” Dalton said.
Sen. Washington expressed support for addressing the player association concerns.
Mike Winter from the Missouri Gaming Association said casinos will continue conversations on the player association concerns following the hearing.
The Senate Appropriations Committee adjourned without voting on the House bill.
Other topics at Missouri Senate committee hearing
Other areas of interest discussed at the hearing include:
- The House bill increased sports wagering revenue going to problem gambling programs from $250,000 to $500,000. Hoskins questioned if that was enough. He said other states take a percentage off the top equal to $4 million to $5 million.
- Winter brought up that Hoskins’ bill prohibits Tier 2 in-game bets on Missouri-based universities. To Hoskins’ shock, he suggested the committee entertain including the language in a committee substitute.
- Tara Ryan of the Entertainment Software Association asked that, in the context of esports, video game publishers count as the sports governing body. She added that video game publishers are the official data keepers in esports and the ones most vested in the integrity of gameplay.