It’s time to make a good political bet on sports wagering in Kentucky
Last week, state Rep. Cluster Howard, D-Jackson, wrote an editorial about why the General Assembly should just go ahead and legalize recreational marijuana.
His arguments were compelling. “It would provide an immediate and substantial boost to our economy and state government’s bottom line; it would give farmers a major new crop to grow; and it would be a powerful weapon to tackle the devastating opioid and meth epidemics.”
Politically speaking, a state that still has plenty of dry counties is a few years away from legalizing pot. But there’s another “sin” issue bill soon to be filed that would be a first step in raising revenue and has a better chance of bipartisan support: Sports betting. Legislators should not pass up a chance to keep Kentucky dollars in the state to help with our desperate pension problems.
Rep. Adam Koenig, R-Erlanger filed a bill last session, shortly after the U.S. Supreme Court legalized betting on all sports. Since then, 19 states have legalized it; our neighbors Indiana, West Virginia, Illinois and Tenn have passed legislation that is not yet up and running.
“For me, it’s about something that grown adults do on a regular basis and the vast majority of them would like to do it legally,” said Koenig, who chairs the House Licensing Committee. In addition, an analysis of the bill estimates it would bring in about $20 million a year to the General Fund. He didn’t quite have enough votes last time around, but could garner enough from both sides of the aisle in 2020. It could be subject to an immediate court challenge because sports betting is not technically allowed in Kentucky’s Constitution, but Koenig says he believes it’s a game of skill, not chance and so is not prohibited.
House Speaker David Osborne sounded a note of caution: “There is a renewed interest in sports wagering, particularly as neighboring states like Tennessee pass it. However, it is still unknown if it has enough votes to pass both chambers.”
Betting at racetracks
Because this is Kentucky, Koenig’s bill would put sports betting under the Kentucky Horse Racing Commission. Bets on any sports — except Kentucky college teams — could be placed at any of the racetracks or the Kentucky Speedway, or people could download their apps to place bets on line.
For on-site betting, the state would get 10.25 percent of the take, with 14.25 percent for mobile apps. A half percent will go to the Thoroughbred Development Fund.
“You give the lower rates to get them in the house, in the building, where people are interested in wagering on sports but might not be interested in horse racing and they might get more interested in our signature industry,” Koenig said.
That’s not huge, but it’s a start. In addition, it would be a good compromise for our new Democratic governor, who campaigned on expanded gaming, but might not want to pick a huge fight with the Republican super-majorities over whether to try for casinos AGAIN with a constitutional amendment. Beshear’s support of this measure could send it over the finish line.
However, Beshear appears to be sticking to his original stance. In a statement, he said: “We need to pass expanded gaming in Kentucky. We lose out on hundreds of millions of dollars a year. We need to legalize sports betting, casinos, fantasy sports and prepare for online poker, and use the revenue from these activities as a dedicated funding stream for our public pension system, which will free up that money for other things we need to be investing in. I look forward to talking with Rep. Koenig on his proposed bill and working together.”
It’s important to remember that Kentucky already has casino gambling, “fauxcinos,” as I like to call them; betting parlors with machines that look and act exactly like slot machines but aren’t quite the same as those in casinos. (The state Supreme Court is expected to rule early next year if they are legal.) Nonetheless, the racing commission has approved a huge increase in the number of machines over the next year, from 2,800 to 7,000. Overall, they’re on pace to bring in $2 billion this year, before the new machines get started.
A new report from the Kentucky Center for Economic Policy found that if the General Assembly changed the tax rate from 1.5 percent to 3.5 percent of the daily handle, the state could make as much as $60 million a year.
Senate Majority Leader Damon Thayer, R-Georgetown, says he will not budge on changing that rate because it could hurt the horse industry, which already pays a lot of taxes to the General Fund. (I disagree because of the amount of tax breaks the horse industry already gets, like no sales tax on most Thoroughbred sales, and with the huge expansion of fauxcino revenues, the industry could certainly turn another few percentages over to the state. After all, a more prosperous Kentucky would have more money to bet. And get educated, etc. But he is the Senate Majority Leader and I am not.)
But “I’m 100 percent in favor of sports wagering,” Thayer said. “We already have legalized gaming. It’s just an extension of our history and culture here. I think it will bring in new customers and some new revenue, which we can use for the pension system.”
This bill could also be an important start to the bipartisan good will that many are talking about these days, but probably won’t last past the first week of the session. In these desperate budgetary times, pragmatism over politics could serve both parties well.
