Kentucky On Fast Track For September Sports-Betting Launch

July 11, 2023
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Kentucky has less than two months to license operators and make other final preparations for the launch of retail sportsbooks at the state’s nine racetracks and gaming facilities under emergency regulations crafted by the state’s racing commission.

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Kentucky has less than two months to license operators and make other final preparations for the launch of retail sportsbooks at the state’s nine racetracks and gaming facilities under emergency regulations crafted by the state’s racing commission.

Governor Andy Beshear, a Democrat, on Monday (July 10) signed the emergency regulations unanimously approved by the Kentucky Horse Racing Commission (KHRC) that will allow for the licensing of racetracks, mobile sports-betting operators, suppliers, and others associated with the industry.

The emergency regulations will allow retail betting operations to launch on September 7, with mobile wagering set for September 28.

“We are doing this with emergency regulations to start,” Beshear told reporters at a news conference Monday at Red Mile Gaming and Racing in Lexington. “We have to get it up and running. There is no question, we are going to learn a few things from the initial period.”

Beshear said he expected the KHRC will move into regular regulations next year, but those rules still need to be reviewed and approved before they go into effect. Among other things, the rules will include language to discourage misleading advertising and marketing language.

Under the approved emergency regulations, racetracks are permitted to obtain a license through the commission for retail sportsbooks at the tracks and their offsite venues offering historical horseracing machines (HHR). The KHRC will begin accepting applications on Tuesday (July 11).

The tracks would also be able to partner with up to three online betting operators to offer mobile wagering skins in the state.

So far, Caesars Entertainment has formed a partnership with racetrack operators Keeneland and Red Mile. Caesars will operate a retail sportsbook at Red Mile, subject to regulatory approvals.

In April, Churchill Downs entered into a contract with Flutter-owned FanDuel to give the group market access to Kentucky in exchange for a share of the revenue.

Messages left Monday with BetMGM and DraftKings seeking comment were not returned, although both operators are believed to have already agreed market-access partnerships for Kentucky too.

The initial license fee for each racetrack is $500,000, with a $50,000 annual renewal fee, while there is a $50,000 fee plus a $10,000 annual renewal for a mobile operator’s license.

“So, there will be upfront payments,” Beshear said. “There will be renewal payments and then there will be an annual taxable amount that comes back to the commonwealth.”

Beshear expects sports betting to generate about $23m a year in tax revenue but anticipates that figure will go up over time.

According to VIXIO GamblingCompliance's U.S. Sports Betting & iGaming Data Dashboard, gross sports-betting revenue in Kentucky is expected to reach $163m in 2024, $206m in 2025 and $241m in 2026.

Retail betting revenue will be taxed at 9.75 percent, while mobile wagers will be taxed at 14.25 percent.

The KHRC’s vote on Monday during a special meeting comes just over three months after the Senate approved House Bill 551 by a vote of 25-12, with all seven Democrats joining with Republicans to get the measure over the 23 vote, or 60 percent threshold required to pass.

The House of Representatives passed the bill in early March by a vote of 63-34.

Beshear then signed the bill, which took effect on June 29.

“When you look back at this, the odds were against us, but we were determined to get sports betting passed in Kentucky and we got it done,” the governor said.

Both Beshear and Republican Representative Michael Meredith, who sponsored HB 551, gave credit to former Representative Adam Koenig, a Republican and a long-time supporter of legalizing sports betting.

“It was Adam Koenig who beat his head against the wall for the last five years since [the Professional and Amateur Sports Protection Act] was repealed and who kept coming back to the well,” Meredith said. “He will always be known as the godfather of Kentucky sports betting.”

The emergency regulations took effect on Monday after being filed with the Legislative Research Commission.

The KHRC also filed “ordinary regulations” at the same time, which include a period of public comment and legislative review.

“The commission has a long history of pari-mutuel wagering integrity and is uniquely positioned to protect Kentucky bettors,” said KHRC chairman Jonathan Rabinowitz. “Wagering integrity was the top priority of these regulations. We also considered the importance of flexibility to meet the changing demands of the industry.”

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