Is Kentucky Sports Betting Bill Losing Steam?

A bill to legalize sports betting in Kentucky looked like a shoo-in when it was introduced by Rep. Adam Koenig (l.) in January. Since then, HB 137 has languished, and the issue has split House Republicans into opposing camps.

Kentucky is home of one of the most celebrated sporting events in the world: the Kentucky Derby, first leg of the fabled Triple Crown. While sports fans in the state can bet on the Derby and other pari-mutuel races, other legal sports wagers are strictly off-limits.

House lawmakers seemed ready to change that in January, when they voted unanimously for a sports betting bill that would allow betting on professional and college sports at Kentucky’s racetracks, Kentucky Speedway and online.

The proposal calls for a $500,000 license fee, a $50,000 renewal fee, and a tax rate of 10.25 percent, rising to 14.25 percent for online betting revenue. The Kentucky Horse Racing Commission would regulate sport betting activities. According to one estimate, sports betting would bring in up to $22.5 million in annual revenues for the state, which now offers just three forms of legal betting: pari-mutuel racing, a state lottery, and charitable gaming, such as bingo and raffles.

The bill, sponsored by Rep. Adam Koenig (R-Erlanger), was expected to go directly from committee to the full House, but abruptly stalled. It’s languished ever since, and caused an ideological rift among House Republicans.

“I like to say this bill has bipartisan support and partisan opposition,” Koenig told GGB News last week, “and that partisan opposition is coming from my own party.”

Republicans are said to be split into two camps: pro-business lawmakers who want the additional tax revenues that could be generated by sports betting, and those who object on moral grounds. “And really, there’s a third camp,” Koenig said, “people in the middle who aren’t motivated, in an election year, to mess with a controversial bill.”

In his view, adults should be free to make their own decisions about sports betting, which is now legal in some form in 20 states, including many that border Kentucky. “If they’re going to do it, let’s do it in a regulated, safe, effective manner that protects people,” he said. “The opposition basically wants to protect people from themselves.”

Kent Ostrander, executive director of the Lexington-based Family Foundation Executive Director, spoke for critics when he said he’s concerned about 24/7 mobile access to gambling, especially by young people. He added that sports betting “targets the family.”

“Corporations can’t gamble, businesses can’t gamble, nonprofits can’t gamble—all the money comes from families,” Ostrander told GGB. “Gambling can corrupt the government, and the vulnerable are literally destroyed by it. The state should not be working mechanisms to fleece its own people.”

Rep. David Hale, R-Wellington, is also part of the loyal opposition. “From the beginning, I’ve been opposed to this piece of legislation, for two reasons,” he said. “I oppose it from a moral position—I feel it’s not a good policy—and I oppose the fact that, from all the figures we’ve been given, sports betting might generate between $10 million and $20 million. I just think the social costs far outweigh that.”

Koenig hears the argument, but obviously disagrees. “I honestly don’t care if it brings in any money—it’s a choice grown people should be able to make, and we shouldn’t be outlawing it. But I’m not upset that it’s going to generate some revenue. I would rather generate it that way than by increasing taxes.”

According to Koenig, some House Republicans “would outlaw horse racing, lottery and charitable gaming if they could. There are some who think what we have is more than enough, and don’t want to see it increase. But the American Gaming Association estimates that $2 billion is spent illegally wagering on sports, in Kentucky alone.”

The bill was expected to sail to an easy victory this year, especially with a new, pro-gaming governor in office, and support from influential organizations like the Kentucky Education Association, the Kentucky Chamber of Commerce and Greater Louisville Inc. But it’s still stuck, and voices both sides of the debate have been duking it out in dueling op-ed pieces.

In the Cincinnati Business Journal, Dave Spaulding, of the Northern Kentucky Chamber of Commerce, wrote that anti-betting forces “aren’t protecting Kentuckians from anything. They’re only costing us badly needed revenue. If they truly care about Kentucky families, why not allow us to use some of that revenue for our schools and pensions?”

In the Louisville Courier-Journal, Martin Cothran, senior policy analyst for the Family Foundation, countered, “There are many reasons to be concerned about the societal effects of this bill, and in particular, its effects on those who can least afford to be on the losing end of the wagers made under it. It would target the poor and particularly young people.”

The legislative session ends April 15, and Koenig said he’ll spend the next month working to drum up support for the measure, “and maybe altering the bill.” Hale said inaction on the bill means it doesn’t have the votes to pass—and he’d like to keep it that way. “As every day goes by, it’s less and less probable that it will go to a vote,” he said.

In an email from the office of Governor Andy Beshear, Deputy Communications Director Sebastian Kitchen sounded optimistic. “Governor Beshear knows sports betting would pass now if it was brought up for a vote,” Kitchen wrote. “Kentuckians are already spending this money, but must cross into other states, where the dollars go to Indiana infrastructure or Ohio’s healthcare or West Virginia’s schools.

“We should keep this money in Kentucky,” he wrote, “and use this revenue to fund education and pensions without raising taxes on our hardworking families.”

Until that time, Kentuckians will still have to cross the border to place most of their bets—or else venture into the gray and black markets that thrive outside the legal industry.