Kentucky joined the expanding group of states with legalized sports betting when Gov. Andy Beshear signed House Bill 551 on March 31.
Today, June 28, that bill takes effect. As a result, sports betting in Kentucky is finally legal. In other words, the Bluegrass State joins the dozens of other states with a regulated sports betting market. Now, we wait for the Kentucky Horse Racing Commission to regulate the industry and launch it by Dec. 28 at the latest.
Here’s how we got here.
A bill finally passes
After failed attempts in the past, a sports betting bill finally made it to the governor’s desk last spring. But not without challenges.
The bill was introduced in February and sponsored by a bipartisan coalition of 16 legislators that included the House leaders of both parties. It didn’t receive enough support until the day it was passed, with crucial Senate votes coming at the last minute. After clearing the Kentucky House, HB 551 needed at least 23 votes from the Senate chamber. It passed 25-12.
Senate Majority Floor Leader Damon Thayer was overjoyed with the passage:
“Sports betting is something I have wanted for Kentucky for a long time because I view it as an extension of our time-honored tradition of betting on horse races,” he said at the time. “I look forward to Kentuckians being able to place their wagers right here in the commonwealth instead of traveling across state lines to spend their money in other states.”
Six of the seven states that border Kentucky have some form of legalized sports betting. The exception is Missouri.
Who will oversee sports betting in Kentucky?
The Kentucky Horse Racing Commission will regulate sports betting in the state. As the home of the nation’s longest-running sporting event, the Kentucky Derby, legalizing sports betting promises to be a financial boon for the state. Only the nine licensed horse tracks and Kentucky Speedway can obtain sports wagering licenses.
Each “track may contract with no more than three service providers at a time” per HB 551. This means that the state can have a maximum of 30 mobile operators in addition to retail sportsbooks at the racetracks and Kentucky Speedway
Currently, there are nine licensed tracks, and eight are active.
- Churchill Downs (Louisville)
- Keeneland Race Course (Lexington)
- Turfway Park (Florence)
- Kentucky Downs (Franklin)
- Ellis Park (Henderson)
- The Red Mile (Lexington)
- Oak Grove (Grove)
- Cumberland Run (Corbin)
- Sandy’s Racing & Gaming (Ashland) – Under construction, but sportsbook and HHR machine areas will be ready to open in October
The Kentucky Speedway is also inactive and now serves as a truck storage space. Officials from the speedway have not indicated whether they will apply for a license, but most in the industry expect them to open a sportsbook.
Types of sports betting allowed
In HB 551, the list of events eligible for sports betting includes the following:
- Professional sporting events
- College sporting events sanctioned by the National Collegiate Athletic Association, the National Association of Intercollegiate Athletics, or other collegiate athletic bodies recognized by the racing commission.
- Amateur sporting events
- International sporting events, including but not limited to the Olympics and World Cup Soccer
- Electronic sports, e-sports, and competitive video game events
- Any other event authorized by the commission
In addition, sports governing bodies can request “restrict, limit, or exclude a certain type, form, or category of sports wagering” if they feel that sports betting will undermine the integrity of sporting events of that body.
How much longer until launch?
The law goes into effect today, 90 days after it was filed with the secretary of state’s office. However, several months of rulemaking by the KHRC will occur before sports betting launches in Kentucky.
“The people are really excited about this, so we want to get it up and going as quickly as we can but also to do it right,” Beshear said in early April.
This past year, it took the state of Massachusetts nearly six months to go from bill passage to the launch of retail sports betting. Online wagering came a little over a month later with 15 mobile betting licenses available.
In those months, members of the Massachusetts Gaming Commission met nearly every weekday and held public meetings online that sometimes lasted for hours, from morning until early evening.
As of April 2023, only six mobile operators are active in Massachusetts. In the years leading up to legalization in the New England state, members of the commission spent time monitoring and studying sports betting rollouts in other states.
It took Ohio a year to launch sports betting from its legalization at the end of December 2021 to launch on New Year’s Day 2023. Under Ohio’s sports betting regulations, the state can have as many as 46 online operators.
Kentucky’s governor wants regulations to be established at an accelerated pace in the hope that sports betting will be available by the start of the NFL season in early September.
“I would really like to have it ahead of that first NFL game, knowing that that is a big starting date for people,” Beshear said.
He indicated that the state would look closely at other states’ “best practices” in establishing a regulatory framework.
Revenue estimates
According to State Sen. Thayer, sports wagering could bring the state an estimated $23 million in proceeds. A 9.75% excise tax on retail sports betting gross revenue will be levied. Online sports revenue will be taxed at a rate of 14.25%. A Kentucky problem gambling assistance account will receive 2.5% of revenue. The remaining 97.5% of the tax revenue will be deposited into the state’s pension fund.
For Beshear and his supporters, it’s crucial to have an aggressive timeline for getting sports betting off the ground so residents don’t have to travel to surrounding states to participate in legal sports betting, contributing to the coffers of Kentucky’s neighbors.
“We have an urgency to keep millions of Kentucky dollars from crossing our rivers and going to support the education and pension systems in our neighboring states,” Beshear said in early 2020. “We are with business, education and pension leaders – Republicans and Democrats – working together on the same team.”
