Kentucky on the Legal Sports Betting Clock?

Legislators in Kentucky, undeterred by their failed attempt to bring legal sports betting to the state in 2020 have signaled that they are eager to take another swipe at legalization during the 2021 legislative session. Kentucky will be looking to build on some momentum gained last year when state Rep. Adam Koenig and the committee he heads, the state Licensing, Occupations, and Administrative Regulations (LOAR) Committee unanimously approved a legal sport betting bill, only to have it stalled due to the inability to even get the subject heard in the state House of Representatives.

Kentucky is home to the second-most bet-on annual sporting events in the United States, the Kentucky Derby. So, expansion of the robust horse racing platform to include other sports seems natural for the state. The fact that the neighboring states of Illinois, Indiana, Tennessee, and West Virginia already have their own legal sports betting scene, and Virginia and Ohio are in the process of finalizing their own platform has given Kentucky an added sense of urgency to get something done quickly.

House Bill 241

The bill put forward in 2020 by state Rep. Adam Koenig and the state Licensing, Occupations, and Administrative Regulations Committee (House Bill 137) was pretty complete but failed to gain any traction in the legislature. House Bill 241 being proposed in the 2021 session closely resembles that piece of legislation. It says that the Kentucky Horse Racing Commission would regulate sports betting with state’s Public Protection Cabinet overseeing daily fantasy, and the Kentucky Lottery Corp. administering online poker - the latter two of which have been added to the newest iteration of the Bill, after not being part of the language in 2020.

All of Kentucky's horse and harness racing track would become eligible for both a retail and mobile sports betting platform as well as all sporting venues, provided they have a 50,000-seat capacity or more. The tax rate follows the structure in place in the current "King of the Betting States", New Jersey. Kentucky will differentiate between the retail and mobile sectors, taxing retail at 10.25% and online apps at 14.25%. Mobile bettors will be subjected to an antiquated and increasingly controversial in-person sign-up requirement. Sports betting licenses would cost an initial $500,000, plus an annual renewal fee of $50,000, with the Commission to oversee the licensing process. Bettors, under the bill, would be allowed to wager on professional and college sports.

Still Work to be Done

Although many in the Kentucky State Legislature have signaled their support for legal sports betting, including Governor Andy Beshear, there is still plenty of hurdles to clear before legal sports betting becomes reality in Kentucky. The biggest current threat is COVID-19 that has dominated the legislative period and has made any sort of debate or committee meetings nearly impossible. There are clearly other priorities for the state at present and little time to introduce anything new to lawmakers.

Kentucky's budget during this time of COVID-drained coffers still has to be drawn up, bills surrounding who gets input on emergency executive orders are still on the table and other legislative priorities are sucking up a good portion of the allotted time during this current 30-day session.

Gaining Support

It is widely known that Governor Beshear is fully on board with any sort of legal sports betting legislation coming to Kentucky and we know that there is bipartisan support from Rep. Adam Koenig and his committee. Monday saw a new ally surface in the form of Kentucky Government Retirees President Jim Carroll who tweeted: "Kentucky Government Retirees supports HB 241 as a common-sense measure to tax an existing activity in Kentucky while helping fund pensions”. House Minority Leader Joni Jenkins, D-Shively and a total of 17 Representatives have joined the Governor and R-Adam Koenig as backers of the new attempt to launch a legal sports betting platform.

The Chances

Gambling is not a new subject in the state of Kentucky, but it has always had a horse racing focus. In the mostly conservative state that has traditionally been tepid at best on legal sports betting at brick-and-mortar facilities, on the surface the chances would seem 50/50. Those factors are on top of the fact that a bill in 2020 didn't even make it into the legislature for debate and the realization that the reluctant Republican Party holds 75 of the 100 seats in the chamber.

That said, even though it may seem like an uphill climb for the legal sports betting industry in Kentucky, COVID-drained Kentucky tax coffers and the fact that all of the state's neighbors will likely have their own platform up-and-running sometime in 2021 could push legislators to get something done in 2021. The framework is there. Time will tell if the desire is too.