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Gambling News
Jonathan ZaunMarch 01, 2019
March 01, 2019

Kentucky Sports Betting Bill Heads to House

After breezing through a vote held by a favorable committee within the House of Representatives, a bill seeking to legalize Kentucky sports betting, daily fantasy sports (DFS), and online poker is headed to a full floor vote.

In a voice vote held on February 20, the 16 members of the Licensing, Occupations and Administrative Regulations Committee overwhelmingly moved House Bill 175 through to the House floor.

Kentucky Sports Betting and Online Poker Bill Already Causing Controversy

State representative Adam Koenig (R-69) – chief sponsor of HB-175 and chairman of the Licensing Committee – had the honor of calling his own legislation for consideration by colleagues.

After being asked, in jest, to introduce himself, Koenig offered a succinct justification for regulating Kentucky sports betting and online poker:

“My name’s Adam Koenig.

I’m a sad little man from Kenton County who’s here to discuss his desire to provide more freedom, more safety for people and more revenue for the state.

That’s all.”

State representative Alan Gentry (D-46) went on to explain that, in his estimation, Kentucky could be doing even more to capitalize on the modern era of statewide gaming expansion:

“My biggest issues are that we’re not going far enough on expanded gaming. You can agree or disagree with gambling, but it already exists.

I live in Louisville. People that like to throw dice and play cards and pull a slot machine already do it.

The only thing we don’t have is the revenue to deal with the small fraction of people that are not able to control their addiction.”

Because of a previously passed budget that won’t expire until June 30 of next year, HB-175’s call for raising and spending state funds requires 60 of the 100 lawmakers in the House to vote in favor.

And while Koenig works to whip the votes needed to secure House passage, his bill is already sparking spirited back and forth.

During a televised debate hosted by “Kentucky Tonight,” both Koenig and Gentry fielded questions and concerns from a pair of gambling opponents representing local religious groups.

Emblematic of the conservative criticism is state representative Chris Fugate (R-84), a pastor who told the Associated Press that he believes the House Republican majority will roundly reject gambling expansion:

“I think there are a lot of Republicans who are against it.

I hope it fails.”

Revenue Projections and Other Regulatory Nuts and Bolts

Per a recent revenue projection analysis conducted by the consulting firm Commonwealth Economics, licensing fees and annual taxes could combine to add as much as $48 million to Kentucky’s coffers each year.

That figure assumes Kentucky achieves first mover status within the regional market, leaving bettors in nearby states like Indiana, Tennessee, and Ohio to cross state lines to place wagers.

But with neighboring West Virginia already operating legal sports betting, and promising bills circulating in the Indiana, Illinois, and Ohio legislatures, the firm’s more conservative estimate has Kentucky hauling in $20 million in annual taxes amidst a crowded market.

In any event, those taxes would be levied at a rate of 9.75 percent on gross gaming revenue derived from bets placed with a brick and mortar sportsbook, and 14.25 percent for online / mobile wagers. Land-based betting revenue would also be subject to an additional 0.5 percent tax contributed directly to Kentucky’s state horse racing fund.

The Kentucky Horse Racing Commission (KHRC) would be tasked with setting up a regulatory framework for Kentucky sports betting, which would be conducted primarily at licensed racetracks and qualifying sports venues that seat over 50,000 people.

These land-based venues would be permitted to partner with iGaming operators to launch internet sportsbooks, but only players located within Kentucky state lines would be able to wager online.

No betting on Kentucky-based collegiate teams would be permitted.

As for online poker, licensing and regulation would fall under the purview of the Kentucky Lottery. Approved operators would pay $250,000 up front for a licensing fee, followed by a 6.75 percent annual tax on gross gaming revenue.

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