Although casino gambling remains illegal in the Bluegrass State, Kentuckians can still participate in three forms of legal gaming.
Horse racing, including slot-machine-style historical horse racing games, is the most popular. According to the Kentucky Department of Charitable Gaming (DCG), horse racing accounted for 75% of all dollars gambled in the state, over $8 billion in total.
The other two forms of legal gambling in Kentucky comprised the remaining 25% of gross receipts:
- Charitable gaming
- the Kentucky Lottery
Gross receipts are defined as money received before adjusting for prize payouts and operating expenses.
Legal gambling in Kentucky creates self-sustaining funds
The addition of historical horse racing (HHR) games at racing tracks in Kentucky has enabled the industry to reach new highs.
In July, the Kentucky Horse Racing Commission (KHRC) announced the 2021-22 fiscal year produced $6.8 billion in handle. That resulted in $490.4 million in adjusted gross revenue.
Both totals represented 48% year-over-year growth that contributes directly to Kentucky’s horse racing economy, especially at smaller tracks like Ellis Park and Turfway Park.
As a result, Kentucky’s venues can offer more races and increased purses throughout the year, bringing in additional gambling from races and HHR games.
The Kentucky Lottery generates additional gaming revenue through ticket sales, which returns 67% to winners. It allocates 22% to reinvest in various state projects, 6% for retailers, which supports local small businesses, and keeps 5% for administrative costs.
Since 1989, the Lottery has generated over $6 billion and helped over 820,000 students pay for college education.
Likewise, DCG is self-supporting through fees on gross gaming receipts from more than 500 licensed organizations making over $25,000 annually. This money goes to charitable purposes throughout the state.
Horse racing
Horse racing made up three-quarters of Kentucky’s gross gaming receipts in 2022. $8 billion was gambled across HHR, live races, simulcasts and advance deposit wagering.
This resulted in $119 million going to the KHRC, which redistributes the money to:
- Added purses
- Track improvements
- Equine research
- the State’s General Fund
Kentucky Lottery
Another $1.5 billion came from the Kentucky Lottery, making up 19% of all revenue for the year. This resulted in $360.8 million going to the state’s education programs.
The calendar year fell slightly below the fiscal year, ending in June with a record $1.67 billion in sales. FY ‘22 marked the 11th straight record year for sales.
Charitable gaming
Charitable gaming receipts surpassed $532 million in 2022, the remaining 6% of gaming. After payouts, adjusted gross receipts totaled $88.1 million.
State law requires organizations to donate a minimum of 40% of all adjusted gross receipts to charitable purposes. Total operating costs were $34.2 million, ultimately raising $54 million to donate (61.24% retention).
Fiscal Year ‘23 horse racing in Kentucky outpacing ‘22 through six months
Horse racing’s recent growth is creating a cycle of more growth. With increased revenue and purses come more opportunities for the same.
New facilities like those at Turfway and Whitley County increased access to gambling and the number of HHR machines in the state. According to a report from The Kentucky Daily, more are expected to come this year, too.
Six months into FY ‘23, horse racing taxes are up nearly 22% YoY. From July through December 2022, the KHRC collected $61.5 million, compared to $50.4 million in 2021.
The Kentucky Department of Charitable Gaming FY ’22 report stated that the second half of the year raised another $57.5 million, a 14% boost. If that trend continues, we’re looking at another $70 million to close out FY ‘23, bringing the fiscal year total above $130 million.
