Kentucky jumped over the biggest obstacle to sports betting passage Friday. After three years of failures, legislation legalizing KY online sports betting, online poker and daily fantasy sports finally cleared the House.
With only mild pushback from the typical anti-gambling crowd, House Bill 606 passed by a 58-30 vote.
Rep. Adam Koenig, who has led the effort for four years, spoke of his elation to PlayKentucky.
“It’s difficult to get gaming bills passed in Kentucky,” Koenig said. “It’s OK that it’s taken four years to get this far. Things worth doing are typically not easy and don’t always happen the first time. I’m excited and looking forward to seeing what my fate is in the Senate.”
The bill advances to the Senate, where passage is likely. The Senate has until April 14 to pass legislation.
Questions remain on who gets licenses
Kentucky is the center of the US horse racing industry. So it’s no surprise that Kentucky sports wagering will go through the horse racetracks.
Any licensed racetrack, offering thoroughbred or harness racing, appears eligible for a sports betting license.
Kentucky currently has five thoroughbred and two harness racing tracks. These tracks include:
- Churchill Downs in Louisville
- Keeneland Race Course in Lexington
- Ellis Park in Henderson
- Kentucky Downs in Franklin
- Turfway Park in Florence
- Red Mile Racetrack in Lexington
- Oak Grove Racing in Oak Grove
Keeneland and Kentucky Downs partnered to build Cumberland Run, a harness racing track in Corbin. It’s projected to open this fall.
One horse track license remains open in Kentucky. Koenig believes that any entity to fill the vacant license could offer sports wagering.
The bill states that each licensed track can offer sports wagering at up to two facilities. The second facility needs to be within 60 miles of the track, and at least 60 miles from any other track.
This seems to set up the potential for 18 retail sports betting locations in Kentucky. However, none of the tracks currently operate an off-track betting facility. Koenig said his intention was for retail licenses to go to existing facilities, which could limit retail sportsbooks to eight.
The bill indicates that each licensed track may partner with one online sports wagering platform. This would allow for eight mobile sportsbooks once Cumberland opens, with the possibility of nine if the open license is filled.
Additional details of Kentucky gaming bill
Here’s some of the other main details of the bill:
- 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.
- Tax revenue goes to the pension system.
- 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.
On the House floor, Koenig added an amendment clarifying that taxes on both in-person and online wagers are off of adjusted sports wagering revenue.
Rep. Josh Calloway tried to add an amendment limiting people to wagering $1,000 a day. Lawmakers resoundingly rejected the attempt.
Online poker stays in the bill
Much to Koenig’s relief, online poker made the final legislation.
An avid online poker player himself, Koenig thought he might have to remove online poker when he introduced the bill. He had heard from some colleagues who were fine with sports betting but viewed online poker as a casino game.
However, it turns out that the online poker aspect of the bill stayed under the radar while everyone focused on sports wagering.
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%.
Bill’s pathway in Senate
For four years, the Kentucky Senate has waited patiently for the House to send over a sports wagering bill. It’s finally happening.
In 2020, Sen. Majority Leader Damon Thayer said the Senate was in full support of sports betting.
Koenig believes the Senate will pass the bill. In the House, he thought he had the votes in past years but he didn’t have enough support in the Republican Caucus.
That’s not the case in the Senate, where Koenig said Thayer and Republican Caucus chair Sen. Julie Adams are in support.
“I don’t know why it would have changed,” Koenig said. “The issue has only become more popular over the years. But I don’t speak for the senate, so we shall see.”
The House also passed HB 608, a bill requested by the lottery, to ban gray machines that have proliferated across the state.
Gov. Andy Beshear also is a long-time supporter of legalizing sports wagering who has asked lawmakers to put a bill on his desk for years.
