The commonwealth of Kentucky issued emergency regulations last month, a necessary step to allow the launch of sports betting by September 7, the start of the NFL season.
Kentucky is also one of the few wagering states legal for those as young as 18, which makes advertising and marketing a topic of concern.
The emergency rules specify that operators cannot advertise or market at “elementary, middle, or high school activities.” They also stay in line with the latest responsible gaming trend by prohibiting the use of “free” or “risk-free” as terminology in advertising.
The state will be on the cutting edge in terms of funding accounts, as one of a few that will allow accounts to be funded using crypto, digital, or virtual currency.
The emergency rules will be subject to public comment until August 31, and an in-person public hearing is set for August 22. The 11 permanent regulations, called “ordinary,” also have a public comment period and a September 22 public hearing, according to Sports Handle.
These proposed ordinary and emergency sportsbook regulations regard licensing for sports betting service providers, personnel, racing associations, and premises. Emergency regs expire in April 2024. Each has a corresponding “ordinary regulation,” and regulators will consider comments, massage the text, and revamp the emergency regulations before they become permanent.
Some 18 pages of “general provisions” are followed by sports wagering standards, technical requirements and oversight, rules regarding accounts, audit and internal control standards, responsible gaming and advertising, and disciplinary actions and hearings.
Kentucky permits as many as 27 sportsbooks, tied in with one of the nine racetracks. Each track can hold three digital licenses plus one retail. Governor Andy Beshear expects esports and sports betting to generate $23 million in tax revenue yearly. Mobile sportsbooks are taxed at 14.25 percent, and retail sports betting operators pay 9.75 percent.
Other regulations establish a lower bar for entry like only requiring operators to be licensed in three other locales in the U.S., not 5.
Initial applications completed for sports wagering conducted in 2023 may also serve as the renewal application for sports wagering conducted in 2024. The Kentucky Horse Racing Commission (KHRC) has set November 1 as an annual deadline to submit applications, which would align sports betting with the state’s horse racing licensing process.
In Kentucky, horse racing is part of the fabric of the state and pari-mutuel wagering is legal under a different law. Several major sportsbook operators also have horse betting platforms, and it is unclear from the current regulations if those operators would be able to integrate their sports and horse betting platforms to make a more seamless experience for bettors.
Some other items of interest:
- Operators are likely to ask for clarity in defining “an individual who has the capability to directly affect the outcome of a sports wager or a payout to a patron;”
- In the “General Provisions” section, the KHRC lists events that are banned, including wagering on penalties, disciplinary proceedings, and youth sports events, all of which are in line with regulations in other states. Also prohibited, betting on the “outcome of replay reviews,” which could use some additional clarity or specificity. As written, that prohibition could mean, for example, that if a touchdown is under review and found to stand up, then the call is an “outcome” of a replay review;
- Operators must request to have markets added to the bet menu a minimum of 10 days prior to the event;
- Operators will initially be required to keep their own self-exclusion lists rather than having a clearinghouse with the regulator;
- The proposed rules require that terms and conditions be part of an operator’s internal controls;
- To provide problem gambling assistance, operators will be permitted to use a toll-free number from a “commission-approved organization” in advertising, promotions, and on websites. This language is broader than in other states, which have been requiring local phone numbers rather than 1-800-GAMBLER, which can be easier for operators live in multiple states to manage; and
- Regulators will require licensees to have their responsible gaming program independently reviewed every five years.
Meanwhile, on July 13, Beshear signed an executive order to create a Sports Wagering Advisory Council (SWAC) to help the KHRC.
Beshear’s newsletter that day said:
“The council will assist in carrying out legal requirements and support the integrity of sports betting in Kentucky. Council members will include the Public Protection Cabinet secretary, three members and an employee of the Horse Racing Commission, and two at-large members.”
One of the council’s advisory jobs is to help the KHRC in “drafting administrative regulations.”
So there may be more sports betting rules to come.
