Kansas is leveraging its burgeoning sports betting revenue to entice Kansas City sports teams to relocate across the state border. Gov. Laura Kelly recently signed HB 2001 into law, paving the way for Sales Tax and Revenue (STAR) Bonds to fund up to 70% of new stadium construction costs. This strategic move aims to secure new venues for professional sports teams, enhancing Kansas’ economic landscape.

Legislative approval and financial strategy:

During a swift legislative session, Kansas lawmakers overwhelmingly approved HB 2001, endorsing the use of STAR Bonds to finance stadium developments. The bill passed 84-38 in the House and 27-8 in the Senate, with implementation slated for July 1. This legislation marks a proactive approach by Kansas to attract major sports franchises, potentially including the Kansas City Chiefs and Kansas City Royals.

Governor Laura Kelly emphasized the economic benefits of modernizing Kansas’ economic development tools. In a statement, she highlighted, “‘By modifying the STAR Bonds program, one of our strongest economic development mechanisms, lawmakers crafted a viable option for attracting professional sports teams to Kansas.'”

Key to the funding strategy is the allocation of revenue streams from sports betting, state lottery sales, and new sales and alcohol taxes generated within designated entertainment districts surrounding the proposed stadiums. These funds will contribute to paying off bonds over 30 years, aligning with Kansas’ financing norms for STAR Bonds.

While the legislation does not specify the Kansas City Chiefs or Kansas City Royals by name, it focuses on facilitating stadium projects for NFL or MLB teams adjacent to Kansas. Estimates suggest potential costs exceeding $2 billion for the Chiefs’ stadium and $1.5 billion for the Royals’, as reported by the Kansas City Star. This initiative underscores Kansas’ commitment to becoming a hub for major sports franchises.

Establishment of the Attracting Professional Sports to Kansas Fund:

The groundwork for this initiative was laid during the legalization of sports betting in 2022, which also established the Attracting Professional Sports to Kansas Fund. This fund earmarks 80% of sports betting tax revenue for attracting sports teams, following allocations to other state funds as per legislative priorities.

Since its inception, Kansas has accumulated $16.6 million in tax revenue from sports betting as of September 2022. The Attracting Professional Sports to Kansas Fund received $3.3 million in Fiscal Year 2023 and $4 million in Fiscal Year 2024, reflecting the growing financial resources available for stadium development projects.

In contrast, efforts across the border in Missouri faced setbacks earlier this year when voters rejected sales tax proposals aimed at funding stadium renovations and relocations for the Chiefs and Royals. This decision has prompted Kansas City, Missouri Mayor Quinton Lucas to prepare competitive offers to retain the teams.

Despite Missouri’s challenges, officials from the Chiefs and Royals have expressed openness to considering Kansas’ proposals, citing favorable leverage conditions. According to industry sources, citing the Kansas City Star, Mayor Lucas acknowledged the competitive landscape, stating, “‘Today was largely, in my opinion, about leverage. And the teams are in an exceptional leverage position.'”