Rep. Adam Koenig Readying Push For Sports Betting In Kentucky

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With a new governor comes increased prospects for the legalization of sports betting in Kentucky.

The election of Andy Beshear to the commonwealth’s top office added further momentum to sports betting becoming legal in Indiana neighbor state Kentucky in 2020. The issue was a point of distinction as Beshear — who will be sworn in Tuesday — narrowly defeated incumbent Matt Bevin last month. The tax revenues raised from sports betting are expected to be used to address a shortfall in Kentucky’s pension plan considered among the nation’s worst with an estimated $13.6 billion in unfunded liabilities.

“We were planning on passing it if Governor Bevin was re-elected with a veto-proof margin,” said state representative Adam Koenig, the primary sponsor of HB 454. “That doesn’t change with the new administration, though I don’t think we’ll get vetoed by the new governor.

“I’ve met with members of his staff, have had a productive meeting, and hopefully we’ll have more and a great deal of cooperation.”

Kentucky needs to keep up

There is some urgency for Kentucky to make sports betting legal. Four neighboring states — Indiana, West Virginia, Tennessee, and Illinois — have already passed laws to make it legal, and Ohio is expected to push forward with its own legislation in next year’s General Assembly. The path is further smoothed in the House in an even year, as Kentucky’s constitution calls for a simple majority threshold compared to 60% in odd-numbered years.

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Indiana and West Virginia have sports betting in place, and the Hoosier State in particular is making an aggressive — and successful — play to attract bettors over the state line. Indiana reported a sports betting handle of nearly $91.7 million in October and has raised more than $1.9 mm in tax revenue in the first two months since first accepting bets.

Kentucky does not have casinos, and sports betting would take place at its racetracks, most notably Churchill Downs in Louisville and Keeneland in Lexington. Beshear is in favor of bringing casinos to Kentucky, but Koenig does not want sports betting tied to those plans because “we do not have the votes for that and don’t want to conflate the two issues.”

One potential point of contention in Koenig’s bill is it does not permit betting on in-state college teams. There are seven Division I colleges and universities in Kentucky, three of which play football at the FBS level. Additionally, the University of Kentucky’s men’s basketball team has one of the most fervent followings in intercollegiate athletics, which is not lost on the state rep.

“I started with that bill this year with that caveat. It is the standard in other states and a safe space to start with,” Koenig said regarding the provision of no bets involving state schools. “Secondly, you can have schools with robust athletic budgets, but smaller universities and others don’t have that, and compliance may be more difficult for them.

“That’s where we started, but it’s easily the most common complaint about the bill and something we are reviewing as to whether we keep in there.”

Alternate approach in Senate

State senator Julian Carroll has already pre-filed his sports betting bill (BR236) to be heard in next month’s session. He had filed bills in each of the previous two years, but neither version was heard in session. Carroll’s version calls for the creation of an independent agency, the Kentucky Gaming Commission, to oversee sports betting and allows betting on state colleges and universities.

Similar to a few other states that have introduced online sports betting, Koenig’s bill requires on-site registration before consumers are able to use personal devices. The bill, though, does not have a sunset provision for that requirement. It has a tax rate of 10.25% for on-site wagering and 14.25% for mobile, with one-half percent of all tax revenue going to the Thoroughbred Development Fund established by the Kentucky Horse Racing Commission.

Koenig’s bill also has provisions for online poker, which he feels is “good policy, and as a game of skill like sports wagering and fantasy sports is, it made sense to put them together.” He also expects to share liquidity with other states in this area, noting the desire to have a “robust poker market that is attractive to operators entering the market.”

There do not appear to be any lingering issues from last year’s ruling by the state’s Court of Appeals to overturn an $870 million verdict in favor of Kentucky against The Stars Group, which runs PokerStars. The original ruling from December 2015 came from a 2011 lawsuit in which the Commonwealth sought damages and seizure of the PokerStars domain name among others. A judge awarded the state $290 million and trebled the amount before The Stars Group filed its eventual successful appeal.

Koenig did not address PokerStars directly but noted his bill has a selection related to “bad actors,” and that any such decision regarding operators would fall to regulators, which would be the Kentucky Lottery Corporation.

Photo by Joseph Sohm / Shutterstock.com

 

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Chris Altruda

Chris Altruda has been a sportswriter with ESPN, The Associated Press, and STATS over more than two decades. He recently expanded into covering sports betting and gambling around the Midwest.

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