Adrian Wojnarowski of Yahoo! Sports reported today that the Kings and Gay had reached agreement on a contract extension worth $40 million over 3 years. The deal includes a player option for the final season, just like his last contract did.

From Woj's article on the deal:

Gay's new contract is set to pay him an average of $13.3 million a year, which is not bad considering the rising salary cap (which could explode in a couple years thanks to the new television contract). That deal falls short of the contracts given to guys like Gordon Hayward, Chandler Parsons, and Josh Smith. There was some thought that Gay would end up signing a $14-15 million a year deal, and this falls short of that. This deal should give the Kings some flexibility going forward to continue to improve the team around Cousins and Gay.

This is a great day for the Sacramento Kings.