House of Representatives approve Kentucky sports betting bill

A bill to legalize Kentucky online sports betting has taken a big step to becoming reality, though its biggest challenges comes in the form of a Senate that has not been historically favorable to sports betting.

Members of the Bluegrass State’s House of Representatives approved Kentucky sports betting bill HB 551 by a vote of 63-34. It surpassed the necessary three-fifths majority to move out of the chamber.

Rep. Michael Meredith’s (R-19) legislation now heads to the Senate, where state sports betting proponents hope it does not succumb to the same fate as previously approved House sports betting bills.

Kentucky House approves of sports betting

Meredith’s bill seeks to legalize retail and online sports betting for the nine licensed Kentucky horse tracks. If approved, each track will be able to partner with up to three online sports betting operators to run their services.

His proposed law gives the Kentucky Horse Racing Commission the regulatory power over sports betting in the state and the authority to award licenses. Tracks would pay an initial fee of $500,000 for a license and an annual renewal fee of $50,000 to the Kentucky Horse Racing Commission. Sports betting operators partnered with tracks will be required to pay a $50,000 fee for a license and an annual $10,000 renewal fee, Meredith explained during the hearing.

Estimates show Kentucky can expect between $2.3 billion to $2.4 billion in sports betting handle a year, Meredith noted, and nearly $22.3 million in annual tax revenue.

Several amendments to the bill were floated by Rep. Josh Calloway (R-10) that would have changed the legislation extensively. Calloway floated amendments to disallow the use of credit cards to fund online sports betting accounts or place retail bets and a measure to raise the minimum age to participate from 18 to 21.

Meredith urged members of the House to vote again both, arguing that disallowing credit cards would raise cybersecurity issues for patrons who were forced to link a debit card or use ACH payments to make bets. Credit cards, he said, provide consumer protections that those two methods do not.

As for the age requirement? Meredith said 18-year-olds are considered adults in the state and the age is consistent with the current Kentucky gaming laws. Anyone 18 years of age in Kentucky can walk into a licensed horse track and bet on the races, he said.

“When we talk about 18, we’re not talking about children. An 18-year-old can prosecuted by the laws of this state as an adult.”

Both amendments were defeated.

Sports betting bill details

The bill sets the retail tax rate at 9.75% and the online sports betting tax rate at 14.25% on adjusted gross sports betting revenue.

Here are further details on the proposed bill:

• Bets on professional sports, eSports, college events, Olympics, and amateur events will be allowed.
• Residents age 18 and up will be able to participate.
• A requirement for in-person registration for online sports betting accounts was lifted from the final version of the bill.

Meredith floated an amendment to the bill that sets up a problem gaming fund in the state and dedicates 2.5% of sports betting revenue to the program. The amendment was approved.

Kentucky has been here before

While Kentucky sports betting hopefuls are excited about the House passage, the Bluegrass State has seen this song and dance before.

This is the second year in a row a sports betting bill has reached the Senate. In 2022, Rep. Adam Koenig’s (R-Erlanger) sports betting bill, HB 606, was approved by the Kentucky House of Representatives by a vote of 58-30. It languished in a Senate committee for the remainder of the session and never received a vote on the floor.

Kentucky Republican Senators typically do not vote on a bill if there is not a consensus among them. Koenig’s bill had Democratic support, but reports coming out of the last day in the 2022 session claimed that the bill was likely to come up four votes short on the Republican side of the aisle.

HB 551 faces the additional challenge of also needing a three-fifths majority to pass out of the Senate. Kentucky odd-year sessions are limited to just 30 days and require a three-fifths majority for bills to be passed.

Meredith is hoping his bill stands more of a chance in the Senate this year. His bill stripped online poker and daily fantasy sports from its language, which has been a point of contention for lawmakers in past sessions.