Expect Kentucky to among the first movers on sports betting when the state legislature goes back into the session in January. On Friday, state lawmakers heard from a bevy of sports betting and gaming professionals during a hearing before the Interim Joint Committee on Licensing, Occupations and Administrative Regulations. It was the second such meeting before an interim joint committee ahead of Kentucky’s 2019 session.
“I think you definitely will see one if not multiple bills in Kentucky,” said Global Market Advisors’ Director of Government Affairs Brendan Bussman. “There is definitely a will within some of the active members there who want to bring this up, and there is no reason why they shouldn’t.”
Though the hearing was comprehensive and there were plenty of questions from legislators, it’s unlikely that much will happen in the next month ahead of mid-term elections. That said, a sports betting bill was pre-filed earlier this year, a second is in the works, according to a source, and there could be more to come.
KY Sports Betting On Track In ’19, Lawmakers Have All the Tools They’ll Need to Craft Sports Betting Legislation When They Return to Session in 2019
Friday’s two-hour hearing included testimony from myriad gaming stakeholders, including the Kentucky Lottery Commission, operators IGT and Scientific Games, the poker advocacy group The Poker Alliance, and others. In addition to testimony, IGT and SG brought sports betting terminals for lawmakers to test.
Koenig, who set up the meeting, came away feeling that the hearing had served its intended purpose.
“The goal was to get members of the committee up to speed on the issues and I think our presenters did a great job of doing that,” he told Sports Handle. “I learned a couple of things, but I think our committee members learned a lot.”
Bussman was first to testify and provided a detailed overview of the current state of sports betting in the U.S., including sharing his company’s research on tax rates, how an “integrity fee” would hurt a state’s ability to be competitive, why it would be key for Kentucky to include local university teams and e-sports on the available list of sports betting options, and why a mobile component is a critical piece of any sports betting pie.
Two of those issues — setting a tax rate and mobile sports betting, along with determining what body is best suited to regulate sports betting — were the key issues. Bussman shared a list that showed what tax rates are among current sports betting states.
They range from 6.75 percent in Nevada to more than 50 percent in Rhode Island, in which casinos have more of a “partnership” arrangement with the state lottery. With regard to mobile betting, state lawmakers have not come to a consensus on what that will look like, but Koenig did say it would be a key element of any legislation. It’s become clear that mobile betting is critical to any sportsbook’s offerings with betting handle migrating to digital, which was borne out recently by the release of the New Jersey sports wagering financial report for September: bettors wagered $105 million online and $79 million in person at sportsbooks.
Part of this shift to digital the growing popularity of in-play or “live” wagering, which often moves too quickly for patrons to wait in line for a teller to input the information.
Among the Key Sports Betting Issues in Kentucky: Who Should Regulate Sports Betting? Lottery, Horsemen All Want a Say
Lottery representatives clearly believe they should oversee sports betting while horseman’s groups in the state also believe they are a good choice. A third option, according to Koenig, is to create a new gaming commission that would oversee all gaming in Kentucky. Such an umbrella commission is currently used in several states.
Bussman also shared that allowing consumers to bet on local teams, like the University of Kentucky, “affects revenue.” Koenig said that was the first time he’d heard that, but isn’t in favor of allowing sports betting on in-state teams. Bussman argues that doing so is just taking revenue out of state coffers.
“I find it almost silly that states feel like they need to take these off the table, because then they are leaving” it to the black market, Bussman said. “Why take something off the table, you’re not protecting anyone?”
There is no uniformity among states with regard to betting on in-state teams — as examples, Mississippi allows it, but Delaware does not.
KY Lawmakers Don’t Want an Pay An Integrity Fee As No Professional Leagues Were Present at Friday’s Hearing
Noticeably absent from the meeting were representatives from the professional sports leagues at this hearing. While not present, the professional leagues were likely carefully monitoring the meeting. Last month, four of the professional leagues — the NFL, NBA, Major League Baseball and the PGA Tour — registered lobbyists in Kentucky. But Koenig didn’t feel Friday was the appropriate time to hear from the pro leagues.
“The pro leagues have offered, but I think we need to get our people up to date first before we start throwing in the pro leagues,” said Koenig earlier this month. “When the lobbyists got confirmation that they were (registered in Kentucky), they called me immediately to tell me. The first words out of my mouth were ‘You’re not getting an integrity fee.’ Vegas has been taking sports bets since 1949 and they don’t pay an integrity fee, so does that mean that they were not on the up and up?'”
The NBA, MLB and PGA have been lobbying states across the nation for a 1 percent “integrity fee” to cover the costs of monitoring games once sports betting becomes legal. In recently months then have taken to calling it a “royalty” and at this point would likely happily take one-quarter of one percent.
But Koenig, and the state’s “working group” on sports betting have both publicly stated that paying the pro leagues won’t fly in the Bluegrass State. Koenig has even gone so far as to tweet about his distaste for the fee multiple times. Friday he said lawmakers are unanimous in their desire not to include one.
Reason #2 the leagues don’t need an integrity fee. These are so many business opportunities out there. https://t.co/cagRbFF0w2
— Adam Koenig (@repkoenig) October 6, 2018
Bussman discussed the integrity fee issue in his presentation and later said, “Those organizations stand to make as much, if not more money off things like data feeds, sponsorship dollars, or media rights or fan engagement. There’s a reason why MGM partnered with NBA and the Dallas Cowboys with a casino, those are going to be additional revenue sources for these teams and leagues. … Integrity is in the law, not in the fee.”