Kentucky Sports Betting Bill Filed in General Assembly, Up to 27 Operators Permitted

Posted on: February 22, 2023, 08:08h. 

Last updated on: February 22, 2023, 08:37h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

Supporters of legalizing sports betting in Kentucky hope the fifth time is the charm. On Wednesday, state Rep. Michael Meredith, R-Oakland, filed House Bill 551, legislation that would allow sportsbooks to operate through the state’s racetracks.

Meredith
Kentucky state Rep. Michael Meredith discusses a bill in a House committee hearing on Wednesday. Later that day, Meredith filed House Bill 551, which seeks to legalize sports betting in the state. (Image: LRC Public Information)

The bill is modeled after previous attempts to legalize online and retail sports betting across the Bluegrass State, but there are a few significant differences that Meredith and other proponents believe will carry the bill over the threshold this year.

HB 551 also removes language legalizing online poker and regulating fantasy sports that was included in past sports betting bills.

“Online poker caused problems in the Senate,” Meredith said in an interview with Casino.org after filing the bill Wednesday. “We knew that was an issue.”

Meredith’s bill would give the state’s horse tracks up to three skins, meaning there could be as many as 27 operators in Kentucky. The tracks could partner with one operator in previous versions of the bill. The tracks would pay a $500,000 license fee and $50,000 for annual renewals, while operators would pay $50,000 for their licenses and $10,000 for annual renewals.

The tax rate will remain the same as previous bills, 14.25% for online adjusted gross revenue (AGR) and 9.75% for retail AGR. However, this year’s bill allows operators to deduct the .25% federal excise tax in determining their AGR.

Horse Racing Commission Would Regulate

As with previous attempts at passage, the bill allows anyone 18 and older to bet on sports in the state. That’s the same age requirement for Kentucky Lottery games and to wager at any of the horse tracks.

The bill gives the Kentucky Horse Racing Commission (KHRC) the authority to regulate sports betting and award licenses. The legislation also mandates that the KHRC develop the rules “to establish a fully functioning sports wagering system” no later than six months after the bill becomes law.

Meredith’s bill also covers some integrity issues by making it a Class A misdemeanor if someone bets on a sporting event in which they’re participating. That also includes spouses and “close” relatives of players, coaches, and officials, and any individual who has more than a 5% stake in pro teams and who could influence roster and coaching moves.

It also makes it a Class C felony for anyone to tamper with an event.

HB 551 does brings back a requirement for people to register for online accounts at the tracks. The bill calls for a 12-month in-person registration period after the bill becomes law.

Swift Bipartisan Support for Sports Betting

While there have been other sports betting bills filed during the session, Meredith’s proposal has been the one considered the most likely to move because Republicans control most of the General Assembly’s 138 seats. They hold an 80-20 edge over Democrats in the House and a 30-7 advantage in the Senate, with one seat vacant.

However, Meredith noted his bill quickly garnered bipartisan support. In fact, six of the 10 cosponsors who joined with him on the bill are Democrats. That includes Democratic Floor Leader Derrick Graham, D-Frankfort, even though he filed a legalization bill of his own earlier in the session.

State Rep. Al Gentry, D-Louisville, is also a sponsor, as he was on previous attempts.

“I believe in sports wagering,” Gentry told Casino.org Wednesday. “I think the people want it. That’s probably the biggest reason. At least the people in my district definitely want it, in my city definitely want it, and in my opinion, the people that like to wager on sports are already doing it.”

Kentucky ‘Behind the Curve’

Kentucky finds itself essentially surrounded by legal sports betting states. Six of the seven border states already have licensed sportsbooks operating, and they’re attracting Kentuckians in droves. A recent study by GeoComply found about 180,000 unique wagering accounts used by Kentucky residents in other states during the NFL season.

As Meredith noted Wednesday, no Kentucky community is more than roughly 80 miles away from a legal sports betting state.

A big portion of the state, you can drive across the state line and be there in no time,” he added.

The lawmaker also told Casino.org he did quite a bit of research while working on the bill. He was shocked that roughly three-quarters of the US states have already approved sports betting legislation within the past five years.

“I knew we were a little behind the curve,” Meredith said. “I didn’t realize we were as far behind the curve as we actually were.”

Meredith Said House Support Remains Strong

Last year marked the first time the Kentucky House approved a sports betting bill. Proponents worked in the Senate up until the final day of the session, but those efforts came up about four votes short.

One difference between last year’s and this year’s session is that this year is not a budget year for lawmakers. Because of that, any revenue-generating bill requires a three-fifths majority in each chamber. During budget years, those bills require just a simple majority.

Even with 25 new House members this year, the 60-vote threshold is likely attainable. Last year, the House voted 58-30 to pass it, and there were a few supporters who weren’t on hand when the vote was taken.

Meredith said 30 current GOP members voted for the bill last year, and another supporter who missed last year’s vote is also back. He also believes they can pick up about 10 new Republican representatives.

He also expects most, if not all, Democrats to get behind the bill, largely because Gov. Andy Beshear, also a Democrat, is an avid proponent of legalizing sports betting.

Will the Senate Vote This Year?

Where it may get tricky is in the Senate. Because of the three-fifths stipulation, it means it’ll need 23 yes votes. That means if all Democrats in that chamber support the bill, it’ll need 16 of the 30 Republicans to vote yes.

Senate Majority Floor Leader Damon Thayer, R-Georgetown, told Casino.org in a text that that threshold is a “barrier to successful passage.” Still, he remains the bill’s biggest champion in the Senate. He worked closely with Meredith on some of the changes made to this year’s bill.

I am looking forward to working with Rep. Meredith to try to move the sports betting bill further than it has before,” Thayer said.

Meredith said he didn’t want to be “overly optimistic” but believes they’re close to the votes they need.

Crunch Time Already in Frankfort

Timing may also be an issue.

Odd-year sessions last only 30 legislative days, and Wednesday was the session’s 14th day. The session runs four days a week through March 16, and after a veto period for Beshear, lawmakers return to Frankfort to conclude it on March 29-30.

In an interview Tuesday, House Licensing, Occupations, and Administrative Regulations Committee Chairman Matt Koch, R-Paris, indicated that the committee’s top priority is a bill to ban gray games or skill games in the state. He said he wasn’t sure the committee could hear two bills of that magnitude during the same meeting.

Theoretically, that means the sports betting bill may not get a House committee hearing until the week of March 6. If that’s the case, it means the bill may not get a vote in the House until the end of that week or early in the week following. That schedule would give the Senate little time for passage, although they could consider it during the final two days of the session since supporters know Beshear would sign the bill into law.