Kentucky House Passes Sports-Betting, Grey-Market Games Bills

March 21, 2022
Kentucky took a step toward legalizing sports betting and banning grey-market slot machines on Friday after the state's House of Representatives approved two bills, but left decisions on proposals to establish a problem gambling fund and reset taxes on pari-mutuel wagering for another day.


Kentucky took a step toward legalizing sports betting and banning grey market slot machines on Friday (March 18) after the state's House of Representatives approved two bills, but left decisions on proposals to establish a problem gambling fund and reset taxes on pari-mutuel wagering for another day.

Lawmakers voted 58-30 in favor of House Bill 606, which would allow sports wagering on mobile devices and at retail locations, including those associated with racetracks such as Churchill Downs in Louisville.

The bill now heads to the Senate, where the Republican majority leader has already expressed his support

“With the passage of House Bill 606 in the House of Representatives, the sports betting issue moves to the Senate,” Senator Damon Thayer said in a statement Friday. “We will be reviewing the bill and assessing its chances in our chamber.”

“I am a firm supporter of sports betting and hope enough of my fellow members join me in supporting the measure so that we can join the rest of America in allowing it to occur,” Thayer said.

Republicans have so-called super-majorities in both chambers, but the sports-betting issue has divided GOP members who are historically hesitant to embrace any form of gambling expansion.

There is also a deadline approaching for the end of the 2022 session, with Friday being the 51st day of this year’s 60-day legislative session.

The bipartisan bill, whose chief sponsor is Republican Representative Adam Koenig, passed out of the House Committee on Licensing, Occupations, and Administrative Regulations on Wednesday (March 16), two days before it garnered enough support to pass the House.

Koenig led similar efforts in 2019 and 2020 that saw bills advance to the House floor but die there without a vote.

“House Bill 606 brings activities that go on in every corner of this state out of the darkness and into the light,” Koenig said. “It legalizes sports wagering and regulates it. It regulates daily fantasy sports … and it legalizes and regulates online poker.”

Koenig’s bill would tax sports betting by implementing a 9.75 percent tax on the adjusted gross revenue for in-person sports betting and a 14.25 percent tax on mobile wagering. The revenue, estimated at $22.5m annually, would go toward the state’s pension fund.

“Given how many states have exceeded their projections, I think $22.5m is probably a minimum,” Koenig said speaking on the House floor.

Opponents of the bill argued that expanding gambling is not the best way to produce new revenue for the state.

Republican Representative Josh Calloway, who voted against HB 606, attempted to amend the bill to place a $1,000 limit on how much a customer could lose in a 24-hour period online.

“For instance, if you are a bartender and you see someone that is [drunk], you would stop and not serve them anymore, and I believe that we could put these same types of limits on this if this is going to move forward,” Calloway said.

Koenig pushed back, saying that some sports-betting operators already have those safeguards in place. He also said people should be able to choose how they spend their money.

Calloway’s amendment failed by a voice vote.

Grey-Market Machine Ban

The House also approved HB 608 on Friday. The measure would ban so-called “grey market” machines that resemble slot machines but are unregulated.

The measure would also require the Kentucky State Police to establish a task force dedicated to the removal of gambling devices not authorized by law, as well as instruct the Justice and Public Safety Cabinet to establish administrative regulations and reporting requirements.

Representative Killian Timoney, who authored the bill, criticized the gaming companies providing unregulated devices for entering Kentucky without consideration for those who write the laws in the legislature.

He said these machines have infiltrated every county in the Commonwealth and are a threat to the Kentucky Lottery and to charitable gaming.

“We are asking for this bill to rein in the bad actors,” Timoney said. “The companies who have operated without permission.”

Opponents of the bill include: former state Justice Cabinet Secretary John Tilley, who now lobbies for the skill gaming industry; Paul Golden, CEO of manufacturer Pace-O-Matic; and Ryan Straw, vice president and governmental affairs director with the Kentucky State Fraternal Order of Police.

“HB 608 is a trojan horse, disguised as a bill to ban skill games, but, in reality, HB 608 is a massive gambling expansion bill,” Pace-O-Matic said in a statement.

“This bill allows the for-profit lottery companies, historical horseracing companies, and charitable gaming suppliers to expand without legislative approval. That is the same thing the Kentucky Lottery did when they instituted online lottery and Keno.”

“It is unfortunate that members of the General Assembly insist on limiting the freedoms of Kentucky business owners,” the company said. “Instead, they have the opportunity to create a framework to tax and regulate the skill game industry, which would not only support small businesses but also generate additional tax revenue to address important needs in the Commonwealth.”

Lawmakers passed the proposal by a 39-11 vote, with 50 House members choosing not to vote on Timoney’s bill. The bill now heads to the Senate for further consideration.

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