Kentucky sports betting pulled off the comeback of the year to pass through the Senate on the final day of the legislative session.
The Kentucky Senate passed sports betting legislation Thursday by a 25-12 vote. The bill needed 23 votes to pass by a three-fifths margin.
Senate Majority Leader Damon Thayer took the reins in the Senate and guided HB 551 to victory.
Thayer provided PlayUSA with this statement:
“Sports betting is something I have wanted for Kentucky for a long time because I view it as an extension of our time-honored tradition of betting on horse races. I look forward to Kentuckians being able to place their wagers right here in the commonwealth instead of traveling across state lines to spend their money in other states. This is a great day for the commonwealth and its people. Freedom won the day.”
Gov. Andy Beshear signed the bill Friday morning in a ceremony at the Capitol, making Kentucky the first state to legalize sports betting in 2023 and 37th overall.
Fiscal estimates say Kentucky sports wagering could generate approximately $23 million in tax revenue a year.
A comeback for the ages
Entering the veto recess two weeks ago, Thayer told PlayUSA that the Kentucky sports betting bill was a couple votes short. Headed into the final day of the legislative session, he told a local reporter it was still one vote short of passage.
The Senate waited until after 5 p.m. local time to take up the bill.
Sen. Brandon Smith appears to have been the key member to switch his vote. He explained on the floor that he argued against the bill with his constituents but the voters of his district told him they want to have this freedom.
“For those of you that have studied political science, they tell you as a leader you have two options. You can be a steward or a ward of your district. Now, the steward pretty much tells you that this medicine is good for you … they tell the district what they’re going to do. And the ward tells the district what they believe, and if the district doesn’t agree with them the ward carries out what the majority of the district asks them to do.”
Senate President Robert Stivers, long thought to be an obstructionist for Kentucky sports betting, also was a surprise yes vote.
Kentucky sports betting legislation seemed like a long shot entering the year. It’s more difficult to pass legislation in Kentucky in odd years. It’s a shorter session and passage requires a three-fifths vote rather than a simple majority.
“It was a great bipartisan effort,” bill sponsor Rep. Michael Meredith told PlayUSA. “Everything broke the right way this afternoon for us to be successful. I want to thank all the Senators that joined us to finally bring a safe, legal and regulated market for sports wagering to the citizens of the Commonwealth.”
Few opponents speak on the Senate floor
Since Kentucky first took up sports betting legislation in 2019, six of the seven states surrounding it have legalized sports betting.
Meredith argued that Kentuckians already were betting on sports betting, whether crossing the border to these states or on illegal offshore websites. So the Commonwealth should regulate the activity for its citizens.
Sen. Whitney Westerfield didn’t care for that argument.
“Let the other states do it,” Westerfield said on the floor. “I’m one of those bordering counties. I know people are going to Tennessee. Let them. If you bring this here, there will be more families doing this here. This is a harm we can avoid.”
Sen. Karen Berg responded directly to Westerfield.
“I don’t feel that I was elected to be the morality police. In fact, I don’t think I was elected to be the person that has the power to tell my constituents what they can or can’t do with their own money, with their own body, with their own thought processes and with their own minds.”
Sen. John Schnickel, who was the only dissenting vote when the bill moved through his Senate Licensing and Occupations Committee two weeks ago, said he supported sports wagering legalization a year ago but changed his mind. Schnickel also previously sponsored the historical horse racing bill passed for Kentucky racetracks.
“Hyper gambling, which will not improve our society, and allowing sports betting especially on collegiate sports and to a lesser degree on professional sports concerns me deeply,” Schnickel said. “I’ve noticed a very high interest, especially in young men, in this type of gambling.”
Details of Kentucky sports betting legislation
Here’s the key details of HB 551:
- Authorizes retail and online sports wagering for licensed Kentucky horse racetracks.
- Nine racetracks could partner with up to three mobile sports wagering providers for a maximum of 27 Kentucky sports betting apps.
- Simulcast facilities can have retail sports betting using the partner of their parent racetrack.
- Regulated by the Kentucky Horse Racing Commission.
- Allows wagering on professional sports, college sports, amateur sporting events (not including events with individuals under 18 years of age), international sporting events including the Olympics and World Cup Soccer, and esports.
- Minimum age requirement of 18 to wager on sports.
- Sports wagering licenses cost $500,000 the first year and $50,000 annually thereafter.
- Service provider licenses cost $50,000 the first year and $10,000 annually thereafter.
- Tiered tax rate of 14.25% for online wagers and 9.75% for sports wagers placed at racetracks.
- 2.5% of taxes collected go to a problem gambling fund. The bulk goes to supporting the state’s pension system.
- Adjusted gross revenue excludes federal excise taxes but not promotional credits.
- Any person tampering with the outcome of a sporting event is a Class C felony.
Racetracks eligible for licenses
Sports wagering licenses are tied to racetrack licenses issued by the Kentucky Horse Racing Commission. The Commission has issued nine licenses, but Churchill Downs owns two of them.
Churchill Downs bought the old Louisville Downs license to open the Derby City historical horse racing facility.
Kentucky horseracing licenses potentially eligible for sports wagering are:
- Churchill Downs
- Ellis Park
- Keeneland Association
- Turfway Park
- Kentucky Downs
- The Red Mile
- Oak Grove
- Revolutionary Racing (not yet open)
- Louisville Downs (owned by Churchill Downs)
When Kentucky sports betting could launch
There was no doubt that the Democratic Beshear would sign the Kentucky sports betting legislation. He has pleaded with the Republican legislature to pass the bill for years.
Beshear tweeted on the passage:
“After years of urging lawmakers to legalize sports betting, we finally did it! Today’s result shows that hard work pays off. Kentuckians will soon be able to place their bets here, and for the first time, we are going to keep those dollars to support our roads and bridges, schools and communities.”
Kentuckians could place legal sports bets in the state by the end of 2023 or beginning of 2024.
The effective date is 90 days after the attorney general enacts the legislation. Although the governor has signed the bill, the attorney general has not yet made the effective date official
The law gives the Kentucky Horse Racing Commission six months after the effective date to promulgate regulations to establish a fully functional sports wagering system. Meredith told PlayUSA his interpretation of this language is that six months after the effective date should be the go-live date.
The final word on Kentucky sports betting goes to the man who worked tirelessly for four years to get it passed. Meredith took the reins this year from former Rep. Adam Koenig, who now serves as executive director of the Kentucky Quarter Horse Racing Association. Thayer made a point to name Koenig in his statement.
Koenig told PlayUSA:
“Moses didn’t get to see the promised land, but he got them on the path. There are many people celebrating today. I’m just so happy that it passed.