Kentucky lawmakers filed bills related to sports betting and so-called gray video gambling machines for consideration in the 2023 legislative session.
Kentucky is one of only 17 states where sports betting remains illegal and unregulated. State Rep. Michael Meredith’s House Bill 551, similar to a measure that passed the House last year but failed in the Senate, would allow horse racing tracks and the Kentucky Speedway to purchase sports-betting licenses for a $500,000 fee. Wagering also would be allowed on licensed websites and phone apps. The bill does not authorize online poker and fantasy sports.
Under Meredith’s measure, adjusted gross revenue of sports wagers placed at racetracks would be taxed at 9.75 percent, and at 14.25 percent for online wagers.
Kentucky Senate Majority Leader Damon Thayer said Meredith’s bill has picked up some votes in the Senate Republican caucus, which blocked it last year. However, Thayer said for HB 551 to pass, it must receive a three-fifths majority vote in each chamber, since it’s a revenue-generating bill in an odd-numbered year. That could push it into the 2024 session, he said.
Supporters and opponents are taking sides in the battle of the slot-like gray machines, which have been proliferating across the state. Three bills concerning the video gambling machines that pay out cash have been filed in the House. State Rep. Steven Doan filed HB 525 to regulate and tax the games. State Rep. Killian Timoney filed two different bills, HB 594 and HB 539, that would ban the games.
Under HB 594, gray games would be differentiated from coin-operated amusement games like skee-ball; operators would face a $25,000 fine for offering the illegal devices. HB 594 has the support of Kentuckians Against Illegal Gaming (KAIG), a coalition backed by the horseracing industry. KAIG reportedly is spending $174,000 on TV and online ads calling on lawmakers to ban the video machines. According to a KAIG statement, if the games aren’t banned, Kentuckians would witness the largest expansion of gambling in the history of the state.
Last year, a measure banning the video gambling machines passed both chambers, but it stumbled over a late-session Senate amendment.
Doan’s HB 525 has the support of the Kentucky Merchants and Amusement Coalition, consisting of bar, restaurant and club owners who depend on the games’ revenue, as well as Pace-O-Matic, the state’s largest manufacturer of the games. In January, the coalition and Pace-O-Matic spent nearly $150,000 on ads urging Kentuckians to ask legislators to legalize the games.
One reason the coalition supports HB 525 is that the legislation would tax the games’ gross profits at 6 percent, compared to state Rep. Tom Smith’s HB 256, which would enact a 26 percent tax on net proceeds. A spokesman for the coalition said HB 525 would establish “a reasonable tax framework that allows small businesses to continue to operate as they are.” The group’s President Wes Jackson added the measure would help small businesses statewide. He said, “Skill-game operators are mom-and-pop shops, local restaurants and bars, VFW halls and American Legion posts. We are not criminals, predators and mafia members, as those pushing a ban would imply.”
