The Kentucky gambling industry has suffered what appears to be a significant blow. Could it help sports betting become a reality in the state?
On Thursday, the Kentucky Supreme Court ruled unanimously that the popular, slot-like “historical horse racing” machines in the state do not constitute pari-mutuel wagering. In other words, the devices at the tracks aren’t legal because they would be considered house-banked, casino-style gambling, which is against the law in the state. Thousands of jobs are said to be at risk due to the high court’s decision.16-page ruling
The ruling puts into question the $2.25 billion industry in the Bluegrass State. That’s how much handle those machines see on an annual basis. Lawmakers are likely to consider legislation to address this issue, considering the large economic impact on the state.
The machines saw less than $400 million in handle just five years ago, so business has been booming. It’s unclear what the tracks are planning to do in the immediate aftermath of the controversial ruling.
The situation with regards to historical racing terminals at Kentucky tracks could make sports wagering even more attractive, but on the flip side it might be hard to do too much at once in the Kentucky legislature when it comes to gambling reform via way of expansion.
The Family Foundation in Kentucky was the group that challenged the legality of the machines.
“Obviously it’s an issue that most likely will need to be addressed,” state Rep. Adam Koenig told WDRB.com. “We have had so much success with these machines in Kentucky, and this threatens the growth of the horse racing industry in our state and puts us at risk [of] being no more important, with the exception of two days a year in Louisville, than states like Oklahoma when it comes to horse racing.”
Koenig, a pro-gambling Republican, has been the primary backer of sports gambling legislation in Kentucky since the mid-2018 U.S. Supreme Court ruling that struck down a federal prohibition that existed on single-game sports betting outside of Nevada.
“Historical horse racing is an important part of Kentucky’s economy that supports jobs and contributes over $21 million to the state budget,” Gov. Andy Beshear, also pro-gambling, said in a statement. “We are working with various partners to find a path forward.”
There are about 3,000 machines in the state, according to the American Gaming Association.
Sports betting on the horizon?
Kentucky is home to a lot of policymakers who are religious conservatives opposed to gambling in general, not just its expansion. The Kentucky Supreme Court ruling doesn’t necessarily boost the odds of the state crossing the finish line on sports gambling, after efforts that failed in both 2019 and earlier this year.
“I asked Koenig whether this might reopen the door to sports betting and casino gambling in Kentucky,” tweeted WDRB reporter Chris Otts, who covers the state’s racing industry. “His response: ‘Politics is the art of what’s possible, and we’ll have to see what’s possible.'”
That’s not exactly optimism. Koenig has sounded more optimistic about sports gambling in the past.
Koenig has tried to legalize the regulation of state-sanctioned poker sites as part of his online sports gambling proposals. Additionally, Beshear campaigned on bringing Las Vegas-style casinos to the state, but it’s long been assumed that casino gambling would be dead on arrival in the legislature. Sports gambling for the racing venues has been a much easier sell, though unsuccessful so far.
There are a lot of moving parts to Kentucky’s gambling future that the legislature will have to consider.
In the meantime, Tennessee to the south is expected to launch sports betting via mobile devices in just a few weeks. Indiana began online gambling on sports in 2019, and Illinois did so earlier this year. Ohio to the north is likely to legalize the activity later this year. Though its industry doesn’t get much fanfare, West Virginia also has sports gambling.
Kentucky, in other words, could soon be surrounded by states with sports gambling.