Bill legalizing sports betting in KY advances to House floor. What are its odds from here?
A bill that would legalize betting on sports contests in Kentucky passed unanimously out of the General Assembly’s Licensing, Occupations and Administrative Regulations committee on Wednesday.
Rep. Adam Koenig, R-Erlanger, presented on the bill and two others linked to gaming in Kentucky – one that would make changes to the taxation of pari-mutuel wagering in Kentucky and another that allocates $225 million in settlement money to address gambling addiction.
Koenig’s House Bill 606, which would also tax sports betting including online poker and fantasy sports, has had bipartisan support. Still, it has been waylaid in 2019 and 2020 because it hadn’t received majority approval within GOP caucuses in the House and Senate and therefore didn’t get a floor vote in the House, according to Koenig.
A key sponsor on the bill this time: House Speaker David Osborne, R-Prospect.
“The problem has never been in this committee, it’s been on the (House) floor,” Koenig said. “But I think we’ve got the support to go forward on the floor.
Rep. Al Gentry, D-Louisville, is co-sponsor on the measure that would legalize most forms of sports betting. He emphasized that Kentucky is one of just 17 states that has not legalized sports betting.
“I think we have the ability to make the decisions for ourselves. People that bet on sports, for the most part are already doing it,” Gentry said. “… We’re going to do what majority of states united states already have, which is legalized like regular sports wagering.”
Koenig also pointed out that many Kentuckians gamble illegally, and that in that setting some who win big on their bets could be denied their winnings without any recourse.
When explaining his yes vote, Rep. Jerry Miller added that according to a poll he conducted 73% of his constituents support legalizing sports betting.
Though no legislators voted against it in committee, David Walls of The Family Foundation spoke ill of the practice and urged legislators to think twice before joining the increasing number of states that have made sports betting legal.
Walls also called the practice a tremendous “wealth transfer from the poor to the wealthy.”
Koenig said that three years ago, the expected extra revenue generated from legalizing sports betting was $22.5 million. He called that figure a “baseline.”
HB 607
Another bill, House Bill 607, raises the tax on advance deposit wagering (ADW) platforms to 1.5%. It also received approval in committee.
ADWs allow bettors to wager on horse races online through betting accounts. To operate in Kentucky, ADWs are licensed through the Kentucky Horse Racing Commission.
Winnings at the racetracks are taxed at 1.5% while winnings paid through ADWs like TwinSpires, which is owned by Churchill Downs, are taxed at 0.5%.
For fiscal year 2021, more than $450 million was wagered through Kentucky’s ADWs. The measure is estimated to bring in an extra $27 million to the state’s General Fund, Koenig said.
That bill does not change the tax rate on historical horse racing (HHR), a slot-like game that bases winnings on the results of previously run horse races, in Kentucky. Koenig said that more of the tax revenue generated by HHR will be directed to the general fund.
The bill also eliminates “breakage,” meaning that bettors will now get their money to the penny, as opposed to twenty-cent increments. Koenig said that the provision will put more money in bettors’ pockets.
The Kentucky Horse Racing Commission, which previously received $3 million in state funding, would be required to entirely self-fund according to Koenig.
The Kentucky Center for Economic Policy has come down harshly on House Bill 607, criticizing that it does not increase taxes on the slot-like HHR machines. The center’s executive director, Jason Bailey, wrote that Kentucky would miss out on a lot of money.
He said that previous attempts to raise that tax by Democrats and Republicans in the House would benefit Kentucky.
“HB 607 comes nowhere close to adequately raising the tax,” Bailey wrote. “... If the amount bet on HHR machines rises from today’s $6 billion annually to $12 billion in a few years, HB 607 would generate only approximately $15 million more for the state’s General Fund. In contrast, raising the tax to the average of the rate proposed by Republicans and Democrats in the 2021 session (a 30% rate on gross commission) would generate approximately $260 million more.”
