Several lobbying groups were involved in moving Kentucky’s recent gambling expansion.
Without those groups, the bill legalizing sports betting in Kentucky might not have made it through the state Legislature. The lobbying forces and challenges the bill met before Gov. Andy Beshear signed it highlights the urban/rural divide that affects legislators’ attitudes toward the gambling industry.
Pro-gambling lobbyists favor sports betting legalization
On one side are the pro-gambling forces. The state’s horse racing industry and sportsbook companies are the most impactful. Kentucky’s sports betting bill allows horse tracks to operate retail sportsbooks and form partnerships with up to three companies for online betting.
Horse tracks also split the revenue with partnered sportsbooks, ensuring the tracks don’t cut into their revenues with the introduction of retail and online sports betting.
Sportsbooks
Since 2018, states have been allowed to decide whether to regulate sports betting. However, sportsbook companies didn’t wait for states to legalize sports betting. They took the initiative to open new markets.
In its November 2022 Capital Markets Day presentation, FanDuel President Christian Genetski praised the company’s “market advocacy.”
“We have two main goals in our market advocacy, and I think our track record to date has been largely successful,” Genetski said. “First, we are trying to unlock new markets, and we have opened 19 states for sports betting and five for iGaming since 2018. … Second, with rare exception, we have seen states adopt mostly consistent regulatory frameworks to both sports and iGaming that have created a regulatory environment in which a company like FanDuel that is operating at scale can thrive.”
Kentucky was a tough market for sportsbooks to pry open. A sports betting bill died in the Senate in April 2022. Kentucky also failed to legalize sports betting in 2020 and 2019. The pressure of sports betting industries adjacent to Kentucky moved a critical mass of Republican legislators to the pro-sports betting side.
Even inter-state competition wouldn’t have pushed legalization without the efforts of Kentucky’s primary gambling industry.
Horse racing industry
The Kentucky horse racing industry is among the strongest lobbying groups in the state. It was among the top 20 lobbying spenders in the state’s 2022 fiscal year.
The defeat of two proposed amendments to the Kentucky sports betting bill also benefits the horse racing industry. Amendments to increase the gambling age to 21 and to ban credit card use from sportsbook deposits were defeated. Those defeats benefited the horse tracks. Patrons who are age 18 can wager at both the track and new sportsbooks. One of the most convenient payment methods also remains available to customers.
When Kentucky sportsbooks go live, retail locations will be at horse tracks, and online sportsbooks will be partnered with the companies that own those tracks. Kentucky’s horse racing industry has ensured that this new form of gambling will contribute to its revenue instead of chip away at it. The horse racing industry secured the most important policy victories it needed to accommodate sports betting’s legalization wave.
Anti-gambling lobbyists in Kentucky
The anti-gambling forces in Kentucky were represented largely by the Kentucky Family Foundation, a nonprofit that lobbies state legislatures to enact “God-honoring public policy.” The Family Foundation is particularly influential with rural legislators, where conservative religious beliefs are particularly widespread and influential. Its lobbying also successfully killed Kentucky’s 2020 effort to legalize sports betting.
Kentucky Family Foundation
The Kentucky Family Foundation is a religious organization, but few of its criticisms are couched in biblical terms. Among the Family Foundation’s concerns regarding gambling are:
- Disproportionate participation by lower economic classes
- Ripple effects of problem gambling, particularly on families
- Potential targeting of professional and student-athletes for scandals
These concerns are reinforced by scripture that casts suspicion on easy money and expounds upon the sinfulness of sloth.
The Kentucky Family Foundation’s lobbying efforts focused on conservative Republican lawmakers representing rural Kentucky areas. After Kentucky legalized sports betting, Executive Director David Walls expressed his frustration at the sports betting vote and the medical marijuana vote.
“… Kentuckians surely did not elect conservative majorities in the General Assembly to expand predatory gambling and legalize marijuana, especially when many pro-family issues need their attention,” Walls said.
Evangelical Christianity is an important force in Kentucky. The American Communities Project categorizes much of eastern and southern Kentucky as evangelical hubs. Representatives from districts in these areas must please their evangelical voters, so these state representatives are receptive to lobbying groups who speak to those voters’ concerns. Despite defeats on sports betting and medical marijuana, the Kentucky Family Foundation remains a significant political force in state politics.
Other stakeholders
While a few key players influenced the legislative effort to legalize sports betting, there were other players throughout the process. Not all of these groups were explicitly for or against sports betting legalization. However, they represented important viewpoints throughout the long road to Kentucky sports betting legalization.
Colleges
Kentucky universities weren’t major lobbyists, but they have an important stake in sports betting’s implementation. Kentucky bettors will be able to wager on college games. College athletes are often financially vulnerable, making them targets for anyone planning a point-shaving scheme.
Universities have honor codes to keep players and their officials from betting. Sportsbooks also require users to register accounts, preventing anonymous gambling. While Kentucky universities still have to enforce student-athlete honor codes, universities have enough athletic departments nationwide to model themselves after to accommodate sports betting.
Professional sports leagues
Professional sports leagues briefly lobbied the Kentucky Statehouse in 2018 for an integrity fee. Kentucky was exploring the possibility of sports betting legalization, and Rep. Adam Koenig was in a leading position then, too. He refused to grant professional sports leagues an integrity fee.
Integrity fees are attempts by professional leagues to capture some of the revenue generated by sports betting. These leagues have argued that there would be nothing to bet on if they didn’t provide entertainment. However, leagues offer nothing to sportsbooks in return for integrity fees. The leagues failed to get an integrity fee in 2018 and again in 2023.
National Council on Problem Gambling
The National Council on Problem Gambling (NCPG) is a nonprofit organization with branches in each state. It provides problem gambling services and lobbies for problem gambling protections. The NCPG is neutral on whether a state decides to legalize sports betting. What it wants is sufficient resources for problem gamblers seeking treatment.
According to the National Association of Administrators for Disordered Gambling Services (NAADGS) 2021 survey, Kentucky allocated no public funds to address problem gambling. Kentucky’s sports betting bill created a problem gambling assistance fund. Two-and-a-half percent of sports betting tax revenue will go to this fund. At a projected $23 million in annual tax revenue, that fund would receive $575,000 each year.
If Kentucky were to foot the bill for a problem gambling hotline, the Kentucky Council on Problem Gambling could focus on other issues, such as youth gambling, harassment of college athletes by disgruntled gamblers or the impact of sportsbook advertising on underage gamblers who can’t bet legally but have access to offshore gambling sites.
Kentucky’s road to sports gambling legalization
Since the Supreme Court decided that states can regulate their own sports betting industries, Kentucky has tried to legalize sports betting several times. Each time, the Kentucky Family Foundation was able to marshal opposition against it.
However, the sports betting landscape is radically different than it was in 2018. Sports betting is now integrated into professional sports events. Sportsbooks run commercials during sports broadcasts. Broadcasters include segments breaking down sportsbook picks. Professional leagues have marketing deals with the sportsbooks they opposed when PASPA was still in effect.
After seeing other states legalize sports betting and with thriving markets on Kentucky’s borders, conservative legislators resigned themselves to regulating sports betting. Enough of the anti-gambling stances chipped away to pass sports betting after five years of effort.
Related Articles:
