Kentucky Sports Betting Moving Toward Launch

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Kentucky lawmakers voted back in March to legalize sports betting in the Bluegrass State.

Now, the market is gearing up for a late 2023 or early 2024 launch. State regulator the Kentucky Horse Racing Commission (KHRC) has started hiring compliance experts and conferring with other legal states on best practices.

One operator, Caesars Entertainment, has confirmed that it intends to partner with Kentucky racetracks Keeneland and Red Mile.

Seven other racetracks, including the famous home of the Kentucky Derby, Churchill Downs, are also eligible for sports betting partnerships.

Market Details

Before any licenses can be handed out and contracts signed, Kentucky regulators need to work out exactly how they’re going to, well, regulate the market.

Last week, Kentucky Governor Andy Beshear announced the first round of new hirings at KHRC.

Those new jobs included advisors, analysts, auditors, and compliance experts.

“This is an exciting milestone. With the additional licensing and enforcement responsibilities, we have to add these jobs,” Beshear told local news outlet WLKLY. “That’s the first step towards the implementation of this program.”

The Commission is on a tight schedule. Beshear hopes to have at least some betting operators live for Kentuckians to wager with at the start of the National Football League season in September.

Since the law goes into effect on June 28, that leaves only two more months to get everything set up. In addition to the two full months since then, that makes an ambitious target of four months from bill passing to market opening.

Other states have previously taken around six months from legalization to market launch.

First Operators

With a potential market launch fast approaching, the first batch of sports betting operators are already showing interest in Kentucky.

The state’s nine racecourses will allow up to three sports betting partners each, with one slot expected to go to a retail sportsbook operator. That means a potential 27 legal sports betting destinations for Kentuckians.

As mentioned, the first company to announce a deal was Caesars Entertainment. It reached a preliminary agreement with Keeneland and Red Mile Racing, both located in Lexington.

Churchill Downs has been partnering with FanDuel for pari-mutuel betting and other racing content since 2022. So it isn’t a stretch to see them expanding that partnership once Kentucky’s market opens up.

Taxes and Revenues

Each host track will pay $500,000 for a license, followed by a $50,000 a year renewal fee. Retail sportsbooks will pay a 9.75% tax on adjusted gross revenues and a mobile operator 14.25%.

Senator Damon Thayer (D-17) was a key sponsor of the bill that saw the market legalized. He estimated Kentucky sports betting could be worth $23 million a year in state taxes right off the bat.

The state doesn’t have any major sports teams, but does have a big history with racing and a big appetite for betting.

More than a million Kentuckians have been rejected from logging into sportsbooks from neighboring legal states since March this year, according to GeoComply. That at least indicates an appetite among consumers.

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