The 9-member bipartisan Kentucky legislative working group studying sports betting has determined that taxes will be based on net revenue and no integrity fee will be paid to professional sports leagues. Former Governor and state Senator Julian M. Carroll said, “I believe there is consensus that the appropriate tax on sports wagering is on net revenue and sports leagues will not receive any fees.”
Earlier this summer, Carroll pre-filed a bill calling for a 20 percent tax on handle. He recently said he determined taxing net handle would be preferable since that’s how the state taxes parimutuel betting. The working group hasn’t set a tax rate yet.
Carroll also said an integrity fee doesn’t “meet with the goals of protecting citizens and generating new revenue.” He said an integrity fee has not been included in the sports betting legislation passed so far in Kentucky, Delaware, New Jersey, Mississippi, Pennsylvania, West Virginia and Rhode Island. Only New York currently is considering including a 1/5 of 1 percent integrity fee, down from the original 1 percent the pro leagues have been seeking.
However, lobbyists for professional leagues registered in the state legislature according to July and August records. Four lobbyists for the National Football League said they will lobby on “any issues related to professional athletics, sports wagering, taxation or sports game integrity.” Nearby Cincinnati, Ohio and Nashville, Tennessee, have NFL teams. Also 10 lobbyists for Major League Baseball will lobby on “any issue relating to professional sports, sport integrity, sports wagering, taxation or business development.” National Basketball Association and the Professional Golfers Association have registered lobbyists, although there is no MLB or NBA franchise in Kentucky.
The working group has met twice so far. Its goal is to introduce sports betting legislation with a good chance of passing in the next session. Beyond raising revenue, especially to help Kentucky’s pension system, Carroll said the group wants to write legislation to protect citizens. He said the legislators have reviewed the “regulatory schemes” in other states plus a study from law firm Dinsmore & Shohl LLC that indicated the climate may be right to allow sports betting in Kentucky, which could generate $5-$26.5 million annually, according to research..
In the meantime, the Interim Joint Committee on Appropriations and Revenue recently heard a presentation on sports betting. Requested by Senate Appropriations and Revenue Chairman state Senator Christian McDaniel, the presentation included an explanation the Professional and Amateur Sports Protection Act and the Supreme Court’s ruling in the case Murphy vs. NCAA. It also discussed sports betting in Nevada, the integrity fee, constitutional issues and regulation.
