Kansas Lottery briefed committee on revenues, transfers and growth of iLottery and vending machines

The Senate Federal and State Affairs committee heard a detailed presentation on the Kansas Lottery budget and revenue flows from Molly Pratt, fiscal analyst for the Legislative Research Department, followed by comments from Kansas Lottery Director Steven Dorell.

Pratt told the committee the agency does not receive state general funds and instead operates from special-revenue sources. She described how the Kansas Expanded Lottery Act allows the state lottery to operate electronic gaming machines at four state-owned casinos managed by third-party facility managers who retain the majority of expanded gaming revenue. Pratt said contractual services account for roughly 89% of the agency's FY26 request due to those contracts.

On FY25 and FY26 numbers, Pratt reported FY25 net casino gaming revenue totaled about $418 million, of which managers retained approximately $305 million and the expanded lottery receipts fund retained about $92.1 million. For sports wagering in FY25, net revenue totaled about $175 million; she said managers retained approximately $157.4 million, while the state distributed $13.3 million to the Attracting Professional Sports to Kansas Fund, $3 million to the State Gaming Revenues Fund, $750,000 to the White Collar Crime Fund and about $335,000 to the Problem Gambling and Addictions Fund. Pratt also said the sports-wagering contracts with facility managers are up for renewal in August 2027 and that a 2025 proviso prohibits the Kansas Lottery from negotiating new sports-wagering contracts in FY26 and FY27.

Director Steven Dorell emphasized that requested expenditures come from lottery-earned funds and not state general revenue, saying, "None of the money we are asking for is money coming out of state general fund." He described the agency's use of funds to support retail sales (district managers and vehicles) and marketing to sustain revenue. Dorell said iLottery sales totaled $32.7 million in fiscal 2025, with about $15 million retained by state funds, and noted vending-machine sales have grown from about $6.4 million in 2020 to roughly $53 million most recently, producing transfers to mental-health programs.

Legislators pressed for clearer, consolidated numbers. Senator Gossage requested a plain breakdown of total wagers versus amounts the state keeps versus amounts paid to managers; Dorell and Pratt offered to compile an easy-to-read package and pointed to published monthly data. Committee members also raised the use and spending of the Problem Gambling and Addictions Grant Fund; Pratt later provided the committee with a figure that FY25 expenditures from that fund totaled $8.9 million with an ending balance of $1.1 million.

Lawmakers and the director also discussed unregulated 'gray' or 'skill' machines found in retail locations. Dorell said statutory language and court rulings narrowed definitions, removing some statutory enforcement tools; he stated the white-collar crime fund was originally intended in part to combat illegal machines, and that enforcement authority and prosecution arrangements vary by jurisdiction.

What comes next: the committee asked staff to produce a clearer numerical breakdown for net revenue, manager shares, and state transfers to inform the budget process and any potential statutory recommendations to address enforcement gaps and machine regulation.