Kentucky Rep. Adam Koenig finally refiled his sports betting bill for 2022 with one key change. He removed the requirement to register for mobile accounts in person for the first 18 months.
Sports wagering is the main component of the authorization bill, which also legalizes and regulates online poker and daily fantasy sports.
Koenig told PlayKentucky the bill is intended to tether sports betting to Kentucky’s four currently operating horse racetracks, which are:
- Churchill Downs in Louisville
- Keeneland Race Course in Lexington
- Ellis Park in Henderson
- Kentucky Downs in Franklin
It’s one of four gaming bills filed March 1, the deadline to introduce new legislation in the Kentucky House. Others address parimutuel modernizations, creating a sustainable problem gambling fund and banning gray games.
Although the issues were filed in individual bills, Koenig would like to pass them collectively with House Bill 610.
Changes to Kentucky sports betting proposal
Koenig has pushed for the Bluegrass State to regulate sports betting since 2019.
From looking at results over the years from other states, Koenig realized that requiring patrons to register in person for a mobile account didn’t make business sense.
“You just have to look at the numbers where all the money is coming from to know that you can’t start that way and expect to have any real results,” Koenig told PlayKentucky.
In addition to allowing for remote registration, the latest iteration includes a few more changes.
The bill no longer authorizes professional sports venues, including the Kentucky Speedway, to receive sports wagering licenses.
Koenig said this is because the Kentucky Speedway hasn’t had a race in three years. And the state doesn’t have any other professional sports venues that would qualify unless a team moved to Kentucky in the future.
Kentucky law allows horse racetracks each to have one off-track betting parlor extensions within 60 miles of their facility. The bill now allows tracks to also offer sports wagering at these facilities.
This creates the potential for eight retail sportsbook locations in Kentucky to go along with four mobile sports betting apps tethered to the racetracks.
Because another bill creates a problem gambling fund, the sports wagering bill no longer earmarks 5% of tax revenue toward problem gambling assistance.
Main details of Kentucky sports betting bill
Most of the main points of the legislation are the same as the bill considered in Kentucky since 2020.
They include:
- Authorizing Kentucky’s four racetracks to offer retail and mobile sports betting (one skin). It’s unclear if previously operational tracks could reopen and participate.
- Each sports betting licensee pays $500,000 for an initial license, renewable annually for $50,000.
- Tiered tax rate of 14.25% for mobile wagers and 9.75% for in-person wagers.
- Online poker licenses don’t have to be tethered to any existing Kentucky facility. The licenses cost $250,000 and can be renewed annually for $10,000. Revenues are taxed at 6.75%.
- Daily fantasy sports operators pay $5,000 to start, and then 6% of the previous year’s adjusted gross gaming revenue to renew if that total is more than $5,000.
- Earmarks 5% of state tax revenue from each activity, minus regulatory expenses, to the Kentucky problem gambling assistance account.
- Sets minimum age of 18 for sports betting, online poker and daily fantasy sports.
Sports betting bill also filed in Senate
Last week, Sen. David Yates filed a sports betting bill in his chamber.
Koenig said he wasn’t aware Yates was going to do so, but that “imitation is the highest form of flattery.” Yates filed the same language Koenig did last year.
Since they didn’t collaborate on the filing, Yates’ bill doesn’t currently have the changes Koenig made for this session.
Parimutuel bill promises change for horse bettors
Koenig’s parimutuel modernization bill looks to capitalize on the historical horse racing legislation passed last session to make three fixes:
- Taxes all parimutuel wagers at 1.5% of gross revenue. Currently, each piece of the industry is at a different rate. Historical horse racing gets taxed at 1.5%, live wagering at 1%, simulcast at 3% and advanced deposit wagering at 0.5%.
- Eliminates breakage. Payoffs for horse bets currently round down to the 10th cent. Going forward, they will pay out to the penny.
- Caps monies put in the Kentucky thoroughbred and standardbred development funds to $40 million.
Koenig explained that rounding off payouts was put in a different time when deep lines at racetracks made it tedious to count out pennies.
“Those days have come and gone, and it’s time to give bettors back their money,” Koenig said. “The historical horse racing bill took care of breeders, owners, jockeys and the trainer. We didn’t take care of the bettors, who we also need to make the show run. So now we’re going to take care of the bettors with this.”
Kentucky would become the only state in the nation to pay bettors to the penny.
“We are taking care of the bettors and making Kentucky the most attractive state to wager,” Koenig said. “This could mean up to $9 million a year back into the pockets of horse players, some of which will go back into the betting pools and generate even larger purses and more money for the general fund.”
Koenig said the tax changes in HB 607 should bring an additional $4.3 million in revenue to the state. He believes capping contributions to the horse racing funds will direct another $20 million annually to the general fund.
Creative way to address problem gambling issues
Last September, Kentucky received $225 million in a settlement with Flutter Entertainment, parent company of PokerStars.
Koenig’s HB 609 directs all of this money toward creating a sustainable trust fund to address awareness, prevention and treatment of problem gambling. Otherwise, it goes into the general fund.
“What better use of this money?” Koenig said. “If managed properly, it should be sufficient to deal with these needs for literally a century or more. It could be the most comprehensive approach in America.”
Shutting down operations of gray machines
In recent years, slot-like gray machines have become prevalent in Kentucky convenience stores.
Rep. Killian Timoney filed HB 608 to clear up that these games are prohibited. Koenig included the language in the omnibus HB 610.
The bill clarifies that any gambling devices not considered charitable gaming nor authorized by the lottery or Kentucky Horse Racing Commission are illegal gambling machines.
It then assigns the Kentucky State Police to establish a task force dedicated to the removal of any gambling devices not authorized by law.
Prospects for Kentucky sports betting effort
Koenig announced the gaming bills at a press conference Monday.
When a reporter asked him to rank his confidence level from 1 to 10 that sports wagering gets a floor vote, he declined to set any odds.
“Certainly, the votes are there on the House floor,” Koenig said. “It’s a matter of getting my fellow Republicans to see the importance of it, the freedom aspects of it, the need to provide support and protections for our citizens.”
In past years, efforts have been derailed by the Family Foundation of Kentucky lobbying against sports wagering. Koenig previously told PlayKentucky that he was waiting until the deadline to file the bill because he knows from past experience that doing so instigates the lobbying efforts of opponents.
But it comes down if Koenig can get enough support from colleagues in the Republican caucus this time around.
He said he has not yet polled the caucus to see where members currently stand on the issue. He hopes that passing the historical horse racing bill last year against objections from the Family Foundation encourages them to support regulating sports betting in Kentucky.
Koenig plans to show his colleagues a recent poll indicating that 65% of Kentucky voters support legalizing sports betting, including 58% of Republicans.
“People like to talk about freedom,” Koenig said. “Well, this is freedom. It’s government getting out of the way and allowing adults to make adult decisions.”
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