Legislators in the Bluegrass State are making another go at legalizing sports wagering, with Republican state Rep. Michael Meredith filing a bill Wednesday that would make the Kentucky Horse Racing Commission the regulatory agency in charge.
HB 551 marks the fifth consecutive year a sports wagering bill has been filed in the statehouse, though optimism is high this could be the year for passage based on what is not in the bill. There is no language to also legalize online poker and daily fantasy sports, the former having long been a sticking point in the state Senate.
Additionally, Meredith’s bill has bipartisan support with six Democrats and five Republicans signed on as co-sponsors. HB 106, which was filed in January and includes language to legalize online poker and daily fantasy sports, is sponsored exclusively by Democrats, who hold just 20 of the 100 seats in the House.
The sports betting bill has been filed. Rep. Michael Meredith, the primary sponsor, tells @LEX18News the bill would only legalize wagering on sporting events.
Online poker and fantasy have been removed to give the bill a better shot at becoming law. pic.twitter.com/AI94uOv4Yh
— Karolina Buczek (@Karolina_Buczek) February 22, 2023
The 2022 bill sponsored by Rep. Adam Koenig progressed out of the House — the first time it moved forward — but did not receive a vote in the Senate. Democratic Gov. Andy Beshear has long been a proponent of legalizing sports wagering in Kentucky, expressing support for legalization during his 2019 gubernatorial campaign and doing so again as he runs for reelection.
Kentucky’s bordering states other than Missouri have sports wagering available, with Ohio the latest to enter the marketplace at the start of the year. Kentucky residents can also cross into Illinois, Indiana, Virginia, West Virginia, and Tennessee to make wagers, with all states having remote registration for instant mobile and online access.
So what’s in HB 551?
Meredith opted to keep the tax rates consistent from previous bills. Retail sports wagering would be allowed at the nine racetracks in the state, with their adjusted gross revenue taxed at 9.75%.
The racetracks could have a maximum of three online skins, creating the potential for as many as 27 online operators, with online AGR taxed at a 14.25% rate. In the first 12 months of legal wagering, the bill requires in-person registration in order to have access to mobile wagering. Remote registration would be available afterward.
Operators would be allowed to carry over negative AGR, but for no longer than a period of 12 months, and would be allowed to deduct the 0.25% federal excise tax when tabulating AGR.
Licenses for tracks seeking a sports wagering license would cost $500,000 with an annual renewal fee of $50,000, while online operators would have a $50,000 licensing fee and $10,000 annual renewal cost.
Kentucky bettors would be allowed to wager on in-state college teams, an important provision considering the rabid following that the University of Kentucky basketball program enjoys statewide. The state has eight schools playing Division I basketball and three FBS programs and two at the FCS level. The bill allows for wagering on NCAA and NAIA events as well as any other college governing body recognized by the Kentucky Horse Racing Commission.
Additional sports and events available for wagering would include “international sporting events, including but not limited to the Olympics and World Cup,” “electronic sports, e-sports, and other competitive video game events,” and amateur sporting events. The commission can authorize other events for wagering as needed, and sport governing bodies can request the agency to restrict or exclude types of wagering that “may undermine the integrity or perceived integrity of that body or covered sporting events of that body.”
Meredith’s bill makes 18 the legal age for sports wagering — consistent with betting on horse racing and lottery offerings in the state but lower than the age 21 minimum in many states.
The bill also calls for a Class A misdemeanor charge if someone wagers on an event in which they are participating. Language in the bill bars wagering by owners or shareholders who have more than a 5% stake in a team, and it restricts spouses and close family members of players participating from placing wagers.
KHRC would be uncommon regulator
Of the 29 jurisdictions that currently have sports wagering available in the United States, only Arkansas has it regulated by a horse racing body. Sports wagering in Arkansas launched in July 2019, but the Arkansas Racing Commission did not launch mobile wagering until February 2022.
The Kentucky Horse Racing Commission would be required to “establish a fully functioning sports wagering system” within six months of the bill’s passage. The KHRC currently oversees the state’s nine tracks for horse racing, parimutuel wagering, and historical horse racing, which allows bettors to place wagers on replays of past horse races.
Historical horse racing generated a $6.8 billion handle in Kentucky for fiscal year 2022, and bettors wagered nearly $700 million in January when combining on-track wagering and advance deposit wagering.