Kentucky Legalizes Sports Betting: What’s Next For Bluegrass Gamblers
Last Friday, Kentucky became the 37th US state to legalize sports betting. The Bluegrass State, home of the Kentucky Derby horse race, will finally see legal sportsbooks open before the year is out.
The final state Senate vote on the bill, which was expected to be very close, passed the Republican-dominated House with a 25-12 majority.
Democratic Governor Andy Beshear then signed it into law on the following morning of March 31.
“Now, after years of urging action, sports betting is legal in Kentucky. We finally did it! Today’s result shows that hard work pays off,” Gov. Beshear said to the crowd after the historic moment.
However the bill’s passage does not mean Kentucky residents will instantly be placing bets. Kentucky law, calls for an official 90-day waiting period. Then, lawmakers may still not have completed all the due process. Expect the first legal sports books in the state to launch sometime before the end of 2023.
Rules and Regulations
Seeing as Kentucky is already home to many venerable and popular horse racing institutions, the new legislation prioritizes them above out-of-state operators.
Any national sportsbook looking to open in the Bluegrass State will have to partner with one of nine designated race tracks. Including the famous Churchill Downs, where the Kentucky Derby is held each year.
If they wish to set up a sportsbook operation, racetracks will pay a $500,000 initial licensing fee, and then $50,000 each year on top of that.
Online or offline partner operators will pay $50,000 initially, and then $10,000 annually.
Online wagers will be taxed at 14.25%. Retail bets will be lower at 9.25%. This is in line with national averages.
Some 2.5% of sports betting revenue will be earmarked for a new, state-run problem gambling initiative, details of which have yet to be announced.
This will all be regulated by the Kentucky Horse Racing Commission. The prior existence of such a regulatory body was a nice talking point for the campaign for legalization in a state that has been hosting horse races for more than 150 years.
Taxes and Benefits
The main proponent and sponsor of the bill, Republican Michael Meredith, said after the bill passed: “An overwhelming number of Kentuckians support allowing consenting adults to legally wager on sporting events… as HB 551 becomes law, our commonwealth can begin reaping some of the benefits.”
In terms of taxable revenues, Kentucky is a fairly sparsely populated state with a relatively religious background. Although many might be in favor of legalization, it remains to be seen how many Kentuckians will actually gamble at legal sportsbooks.
The State’s sports betting revenue prospects are hampered by the fact it doesn’t actually have a top-tier professional sports team. The two most popular teams play college sports at Kentucky and Louisville.
However, industry analysts are reported to estimate that the legal market here could still be worth some $180 million to $200 million in it’s first year.