Kentucky Senate Advances Sports Betting Bill For First Time Ever

Oscar Tshiebwe and the Kentucky Wildcats are favored in our Kentucky vs. Kansas State prediction. — Oscar Tshiebwe #34 of the Kentucky Wildcats shoots over Ed Croswell #5 of the Providence Friars during the first half in the first round of the NCAA Men’s Basketball Tournament on March 17. Jared C. Tilton/Getty Images/AFP

Legislation concerning sports betting has been proposed to the Kentucky General Assembly since 2018, but has consistently lacked support on the Senate floor. However, that has changed now.

Last week, a Senate committee in Kentucky passed a bill to legalize sports betting for the first time ever. The Senate Occupations and Licensing Committee, which includes many social conservatives opposed to gambling expansion, voted 9-1 to move forward with House Bill 551.

The proposed legislation would permit individuals to place bets on various events through electronic devices, at horse track-owned establishments in Kentucky, or in person. The eligible events for betting would include professional sports, college sports, amateur sports (excluding events involving individuals under 18 years old), international sporting events such as the Olympics and soccer’s World Cup, as well as esports.

In Kentucky, the nine horse racing tracks could pay an initial licensing fee of $500,000 and yearly renewal fees of $50,000 to obtain sports wagering licenses. Additionally, online sports betting platforms such as FanDuel and DraftKings could operate in the state by partnering with one of the horse tracks.

The tracks that are involved can partner with a maximum of three sports betting operators to offer sports betting services either on-site at the tracks or through online and mobile platforms.

This bill would allow up to 27 top sportsbooks to participate in Kentucky’s sports betting market by paying a $50,000 initial license fee and a $10,000 annual renewal fee. The Kentucky House approved HB 551 on March 13 with a vote of 63-34. Previous attempts to legalize sports betting in Kentucky have passed the House but failed in the Senate.

Senate Majority Floor Leader Damon Thayer described it as a significant advancement towards legalizing sports betting in Kentucky. The bill would entrust the regulation of sports wagering operations to the Kentucky Horse Racing Commission (KHRC).

Economic breakdown of Bill HB 551

Adjusted gross revenue from online bets would be subject to a 14.25% tax rate, while in-person wagers would be taxed at 9.25%. According to Senate Rep. Michael Meredith, the primary sponsor of the bill, it is estimated that sports betting in Kentucky could generate approximately $20 million in annual tax revenue once fully operational. Of the taxes collected, 2.5% would be allocated to a problem gambling fund, with the majority of the remaining revenue going towards the state’s pension system.

In Kentucky, there is a rich history of legal horse betting, as well as the more recent introduction of slot-like historical horse racing at racetracks. However, the state has never allocated specific funding for addressing problem gambling. According to Meredith, the American Gaming Association (AGA) has estimated that approximately $1.1 billion is illegally wagered in Kentucky each year.

During the 2022 NFL season, GeoComply, a provider of geolocation compliance and security services to the sports betting industry, revealed that 181,000 residents of Kentucky made over five million bets in neighboring states. It is worth noting that six out of the seven states bordering Kentucky have legalized sports wagering in some form.

In January, when Ohio’s sports betting market began, 58,000 individuals from Kentucky attempted to make over one million bets in the neighboring state’s inaugural month of legal sports betting.

The path ahead for Kentucky sports betting

In 2023, HB 551 will require 23 votes for passage due to the higher threshold for revenue-producing bills in odd-numbered years. In an even-numbered year, only 20 votes would be needed for approval.

Obtaining the additional three votes needed in 2023 is proving to be difficult, and even if supporters succeed in securing the necessary votes, there will likely be little room for error.

In 2022, a sports wagering bill similar to HB 606 was passed in the House with a 58-30 vote, but it did not receive support in the Senate. Lawmakers were against HB 606 due to fears that it could lower the moral standards of the state and negatively affect children and families. Despite the fact that over half of American adults now reside in states with legal sports betting, Kentucky still remains in the minority without access to this market.

After March 17, the Kentucky Senate will go on a veto recess until March 29. This leaves the legislature with only two days to pass HB 551 and other bills before the current legislative session ends on March 30. Governor Andy Beshear is expected to sign HB 551 if it reaches his desk, as he has been a vocal advocate for legalized sports betting in Kentucky. Time is running out for the bill to be approved.

If the bill is approved and becomes law, the KHRC will be required to create regulations for a complete sports wagering system within six months of the law taking effect.

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Written By:
Flores Brian

Grant is a former junior B ice hockey player, and a current believer that the Washington Capitals’ aging core still has another Cup run left in the tank. Grant’s owned and operated his own marketing agency since shortly after graduating from Virginia Tech in 2014. He pursued the profession because he figured it’d be a great way to get paid to do something he loves to do, write. After years of hammering puck lines and leading his fantasy football league as Commissioner, Grant started writing about sports betting and the casino gaming industry in 2021 and hasn’t looked back.