Kentucky lawmakers on Wednesday officially began the 2020 push to join the growing number of legal sports betting states, when the House Licensing, Occupations, and Administrative Regulations Committee unanimously approved HB 137, sending it to the full House for a vote. The bill, sponsored by Adam Koenig, underwent a few critical changes earlier this week from when it was initially pre-filed in December.
The bill has 26 bi-partisan sponsors listed, and Koenig is a Republican while new Governor Andy Beshear is a Democrat and sports betting proponent.
The committee removed the “college carveout” and limited the in-person mobile registration requirement to 18 months for expiration. The college carve out would have prohibited bettors in Kentucky from betting on all college teams in the state, but in particular, Kentucky and Louisville, both big basketball schools.
In-person registration compromise
The new in-person mobile registration requirement is a compromise — the bill originally called for in-person registration in perpetuity. Iowa has a similar sunset clause. In-person registration is a deterrent for bettors, and a recent study by iDEA Growth found that an in-person registration requirement “significantly restrict(s) the revenue potential of legal online sports betting, the competitiveness of legal markets, and the tax revenue that flows to state governments.”
“People, if they’re so inclined, will be able able to download every app from every track across the state,” Koenig told the Lexington Herald-Leader. “So that should provide plenty of competition.”
The bill would legalize mobile sports betting and retail wagering at horse racetracks and some professional sports venues. Among the locations that could host sports betting would be Churchill Downs, home of the Kentucky Derby, or the Kentucky Speedway, which hosts professional auto racing events.
🎤🎥JUST IN: @GLIchamber connects with @repkoenig right after HB137-legalization of sports betting, just passed L&O committee by unanimous support! #GLIadvocacy priority! 🏀🏈⚾️⚽️🥊🏒#BetOnSportsKY #SupportHB137 #FundStatePensions pic.twitter.com/5qyJdulo52
— GLI Advocacy (@GLIAdvocacy) January 15, 2020
HB 137 calls for $500,000 application fee and $50,000 renewal fee on operators, and would tax sports betting at professional venues and racetracks at 9.75 percent and mobile platforms at 14.25 percent. In addition, a 0.5 percent tax would be levied on gross gaming revenue and earmarked for several horse-racing funds.
Koenig has been Kentucky’s lead sports betting bill sponsor since sports betting became a states’ rights issue in May 2018. His bill last year never got to a vote, but lawmakers and stakeholders in the state have been talking about sports betting for more than two years now. Just this week, Beshear addressed sports betting in his State of the Commonwealth address on Tuesday, and an anti-gambling group came out hard against sports betting, as well.
Beshear on gaming: ‘We are being left behind’
Beshear, like all of Kentucky’s lawmakers, is trying to find a way to fill a massive pension void — of which potential legal sports betting revenue would be just a drop in the bucket but a drop nonetheless. He ran on a platform that supports sports betting, and continued to do so Tuesday, becoming the first governor this year to call for sports betting in his state. Results are mixed when governors openly support sports betting — governors in Connecticut, Illinois, Massachusetts and New Hampshire did so last year, but only two of those states, Illinois and New Hampshire, were able to pass legislation in 2019.
From Beshear’s State of the Commonwealth: “It is time to stop that flow, to use that money for our needs. Rep. Adam Koenig has filed a sports betting bill. I fully support it, and we should pass it.
“But that shouldn’t be the end of the conversation. Because now, all of our neighboring states – most all of them Republican led – have embraced expanded gaming, while we are being left behind.”
In fact, four of Kentucky’s border states have legalized sports betting, and it’s been live in West Virginia since the summer of 2018 and in Indiana since September 2019. Missouri, Ohio and Virginia haven’t legalized yet, but all appear on the way, with bills floating around their respective state capitals.
Anti-gambling group voices concern
The conservative Family Foundation argued Monday according to Lex18 News that sports betting is an expansion of gaming and would require a constitutional amendment, but lawmakers don’t agree, and one even called the idea a “red herring” during an interim joint committee meeting in December.
Sports betting may have a better shot at legalization in 2020 than it did last year for a reason not related to politics at all — in Kentucky, in even years, revenue bills only need a simple majority. In 2019, revenue bills required a steep three-fifths majority to pass.
According to the Kentucky legislature’s website, HB 137 should move immediately to the House floor, where it will get a first reading tomorrow. From there, the bill will get a second reading and then will be sent to the Rules Committee, which would likely put it in “Orders of the Day” for a specific day (vote). If the bill passes the House, it will be sent to the Senate and go through a similar process. Any changes must be approved by both chambers before it is sent to Beshear’s desk. He’d then have 10 days (excluding Sundays) to sign, veto or let it become law without his signature.
Koenig appears confident that the bill not only has legislative support, but an ally in the governor’s office. When asked earlier today if he could forsee any hurdles, he replied, “Nope. Have a partner in the Governor’s office now.”
