The Kentucky House Licensing and Occupations Committee recently heard Testimony on House Bill 175, which would legalize sports betting. Committee Chairman state Rep. Adam Koenig, who also sponsored the bill, said West Virginia has legalized sports wagering and measures are moving quickly through the Indiana and Tennessee legislatures. He noted Kentucky already has been losing potential revenue by not allowing casinos. “Let’s not be behind the curve, as we have been in other areas on this topic in the past,” Koenig said. The bill also would allow internet poker and fantasy sports.
Koenig added, “It is an opportunity for us to provide something that frankly is done in the shadows all over Kentucky with bookies and you can get on your phone and do it on offshore accounts. You would be able to bet on professional sports games and I think we are going to allow NCAA betting but not on Kentucky teams. So that provides some protection for those universities and those kids.”
Koenig also noted this legislation has more support than any other bill he ever filed. He said, “People are hungry for it. They don’t understand why they can’t do it legally. We have an opportunity now to make sure this is done legally, safely and in a regulated fashion, where people can be protected when they want to engage in this type of activity.”
Commonwealth Economics Founder John Farris told the committee in-person sports betting could generate $4.6 million a year and mobile wagering could bring in $15.6 million a year. He added if no other surrounding states also legalize sports wagering, Kentucky’s annual revenue could reach $48 million a year.
The bill would require sports betting to be taxed at 10.25 percent for in-person betting and 14.25 percent for online wagers. Koenig said the different tax rates would help attract patrons to Kentucky’s horse racetracks and other facilities rather than just placing wagers online.
Revenue collected through the bill would go toward regulation, problem gambling services and the state’s severely underfunded pension systems. “It is not going to fix the problem but it can be one of the tools in the toolbox to get us there,” Koenig said.
If the legislation passes, sports betting would be regulated by the Horse Racing Commission, the state lottery would regulate online poker and fantasy sports would be regulated by the Public Protection Cabinet. Sports betting operators would pay an initial licensing fee of $500,000 with an annual renewal fee of $50,000. Online poker game operators would pay an initial licensing fee of $250,000, a renewal fee of $10,000 and gaming fee of 6.75 percent on such revenue. Fantasy sports operators would have to register with the Public Protection Cabinet and pay an initial fee of $5,000 and a renewal fee of either $5,000 or 6 percent of its adjusted gross revenue, whichever is higher.
Speaking against the legislation, FanDuel Manager of Government Affairs Stacy Stern said players using the mobile sports wagering app should not have to download and register for that app at the physical venues, since the apps can verify the age and eligibility users online. She also criticized the ban on betting on games involving Kentucky universities.
Family Foundation of Kentucky Attorney Stan Cave testified that HB 175 was “an attempt to slip daylight past the rooster,” since it would require a constitutional amendment. Koenig said no matter what form his legislation takes–or if the constitution is amended to allow expanded gaming—the Family Foundation is likely to file a lawsuit, so ultimately the issue will be resolved by the courts.
Governor Matt Bevin has publicly derided trying to fill the state’s pension gaps with new tax revenue from legalized gambling expansion or marijuana. He stated it would take hundreds of years to raise enough revenue and while segments of society would suffer.
