Kentucky’s working group on sports betting appears to have come to at least two decisions regarding sports betting in the state – taxes will be based on net revenue and there will be no integrity fee paid to professional sports leagues.
“I believe there is consensus that the appropriate tax on sports wagering is on net revenue and sports leagues will not receive any fees,” Julian M. Carroll, a former governor turned state senator told Sports Handle via e-mail.
Taxes are a critical component of any sports betting legislation, and the decision to tax based on net vs. handle is a key departure from the bill that Carroll himself pre-filed earlier this summer. That bill called for a 20 percent tax on handle. Kentucky is a big horse racing state and Carroll chose to include a tax on handle in his bill because that’s how the state taxes pari-mutuel betting. No rate has been agreed upon by the working group.
None of the 6 States That Have Legalized Sports Betting Has an Integrity Fee.
Regarding the integrity fee, the working group’s choice not to pay the professional sports leagues falls in line with that of every state that has legalized sports betting thus far.
Delaware, New Jersey and Mississippi, all of which have legalized sports betting, as well as Pennsylvania, West Virginia and Rhode Island, all of which have legalized sports betting, but have not opened yet, do not pay an integrity. The only state actively pursuing legal sports betting that continues to talk about paying an integrity fee or loyalty, is New York. The Empire State did not legalize sports betting during the 2018 session.
Carroll said Kentucky lawmakers don’t favor an integrity fee because it doesn’t “meet with (the) goals of protecting its citizens and generating new revenue.”
Outgoing senator John Bonacic (R-District 42) and Representative Gary Pretlow (D-District 89) have been working on legislation that calls for a royalty of 1/5 of 1 percent of on all wagers. That number is down from the 1 percent from that the pro leagues were originally seeking, but is still significant.
Kentucky lawmakers have spent the summer studying sports betting and how it would play out in the Bluegrass State. A nine-member bi-partisan group of lawmakers from both chambers have met twice so far with the idea of building a consensus and being able to introduce passable legislation during the next session. According to Carroll, the group has studied “regulatory schemes” in other states to see how it would apply and reviewed a study from law firm Dinsmore & Shohl LLC that concluded that the climate may be right to bring sports betting to Kentucky.
Like many other states, Kentucky faces money problems, but Carroll said that while brining dollars into state coffers – particularly the state’s ailing pension system – is the key driver behind legalizing sports betting, the working group wants to protect its citizens.
