Kentucky Sports Betting Bill Advances Though Concerns Remain

Kentucky Sports Betting Bill Advances Though Concerns Remain

A Kentucky sports betting bill continues to gain traction in Frankfort but major concerns remain about the future of legal wagering in the commonwealth.

Lawmakers advanced a sports betting legalization bill out of committee Feb. 20, pushing the bill for a vote before the entire House of Representatives. The debate over HB 175, overwhelmingly passed by the House Licensing, Occupations and Administrative Regulations Committee, will likely come within the next few weeks.

Kentucky has been one of the most aggressive states pursuing sports betting legalization since the Supreme Court struck down the federal ban last year. A bipartisan, bicameral group of legislatures championed the bill leading up to the 2019 session and have been key drivers of the legislation through the statehouse.

Chief among those is Rep. Adam Koenig. The chair of the regulations committee, Koenig co-sponsored HB 175 and defended it at a hearing last week. He, along with 20 other sponsors, will now look to push the bill through the full House and onto the state Senate.

This concerted effort has pushed HB 175 to the forefront of gambling measures. While other gaming-expansion bills, including one that would facilitate the commonwealth’s first-ever casinos, are still percolating in Frankfort, it appears HB 175 is the clear favorite to come into law.

That doesn’t mean passage is a sure bet.

Opposition remains inside and outside the legislature. Even some gaming stakeholders have questioned multiple key tenants of the bill.

Concerns Abound About Sports Betting Bill

Koenig’s proposal lays out a foundation, at least finically, that could make Kentucky a viable sports betting market. Unlike earlier proposals that called for some of the nation’s steepest tax rates, HB 175 now sets fees in line with existing markets like New Jersey. It was also amended to charge to a one-time, $500,000 licensing fee, half the initial mandate of $1 million.

But the bill, industry observers fear, would handicap the market in other areas.

Currently HB 175 allows wagering on collegiate competitions but wouldn’t permit bets on in-state teams. This could be a major restraint on the market’s viability as college programs like the University of Kentucky and the University of Louisville are far and away the most popular team sports in the Bluegrass State. A probation on bets for these two schools could drastically limit the pool of potential players.

Gambling stakeholders are also worried about accessibility – or lack thereof. The current bill would permit online wagering, but it would first require players to register in-person at an authorized land-based facility. Currently only Nevada has this requirement among states now taking legal sports bets.

Unlike Nevada, Kentucky has few gaming facilities beyond horse tracks. A requirement to travel to a limited number of facilities would likely dissuade players who would patronize the legal market and who in turn may remain with local illegal bookmakers or offshore mobile sites.

The full House will now have to tackle these issues – if it is to even accept legal sports betting at all.

Will Kentucky Pass Sports Betting?

Despite it’s reputation as the nation’s premier horse race betting destination, Kentucky has otherwise been one of the states most opposed to gambling.

Republican politicians have dominated the state politically and culturally for a generation and now control both houses of the legislature as well as the governor’s mansion. The GOP has traditionally been more aligned with conservative and religious groups, which maintain outspoken opposition to gambling in any form.

These influences will undoubtedly affect a sizeable contingent of Kentucky’s GOP lawmakers, some of whom have already publicly come out against the bill. Democrats have typically been more open to gambling expansion, but they make up less than two-fifths of the House and one-quarter of the Senate.

Supporters in both parties see sports betting as a partial solution to the state’s drastically underfunded pension fund, but even the most ardent advocates acknowledge it would contribute a minute portion of the multi-billion dollar financial shortfall. HB 175 would impact the state budget, so state law would require a supermajority, 60 percent vote in order to pass the House.

Looming over all these obstacles is the veto threat from Gov. Matt Bevin. A gambling skeptic, Bevin may overrule a sports betting legalization bill, even if written and championed by members of his own party.

Still, the financial opportunities of sports betting continue to drive the bill forward. Along with the potential to bolster revenues at the state’s horse tracks and attract new out-of-state visitors, legal sports betting in Kentucky could help prevent dollars from crossing state lines.

Most Midwestern states, including Kentucky neighbors Illinois, Indiana and Ohio, have taken up sports betting bills of their own. All three, along with up to two dozen more in the Midwest and across the country, could take their first wagers within the next few years. Meanwhile neighboring West Virginia is already taking bets at its in-person facilities and through a regulated website.

That competition for financial opportunity, and threat to an existing potential, is not lost on sports betting’s proponents.

That helps explain why Kentucky has one of the most outspoken groups of sports gambling proponents despite the obstacles before it. Though challenges remain, legal wagering has cleared one obstacle and still carries momentum as it faces another key vote in the imminent future.

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