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Republican state Representative Adam Koenig has successfully guided his latest proposal to legalize sports betting in Kentucky out of committee and onto the General Assembly’s agenda, but its passage is far from assured.
The House Committee on Licensing, Occupations, and Administrative Regulations on Wednesday (March 16) unanimously passed Koenig’s House Bill 606 that would allow mobile wagering on sports and at racetracks in the state.
“I think we are in position, hopefully, to have a better look going forward out of this committee,” said Koenig, who chairs the committee. A similar bill, authored by Koenig, was passed out of the committee by a 18-0 vote in 2020, only to die in the House without receiving a floor vote.
The proposal was one of four gambling-related bills approved by the committee on the 49th day of this year’s 60-day session. All four bills now go to the House floor.
For the fourth time since the U.S. Supreme Court overturned the federal ban on sports betting in May 2018, Koenig is lobbying to get a sports-betting bill through the legislature and signed into law by Democratic Governor Andy Beshear.
Koenig said the measure would regulate millions that are illegally wagered on sports every year in the state.
But the bill is opposed by The Family Foundation, a conservative Christian organization that has long opposed efforts to expand gambling in the state.
David Walls, executive director of The Family Foundation, told the committee that their opposition to expanded gambling was well known, and reminded lawmakers that the “predatory gambling” being proposed in HB 606 “is not a victimless form of entertainment.”
“It is an industry not designed to create wealth but simply transfer wealth primarily from the poor to the wealthy,” Walls said.
In response, Koenig told the committee that “you hear with many of these bills the parade of horribles that will occur if passed and most of the time, if not all the time, the parade of horribles never show up.”
“There is no question that there are costs,” he added. “But those costs exist now.”
Koenig said concerns of problem gambling is exactly why House Bill 609 was introduced. The committee also approved the measure sponsored by the representatives that would establish the Kentucky Problem Gambling Assistance Fund.
The fund uses $225m of the $300m settlement agreed with Flutter Entertainment last year related to the former activities of PokerStars in Kentucky to create the fund that would provide services for residents dealing with a gaming addiction.
Koenig’s 52-page bill would legalize sports betting, fantasy sports contests, and online poker. The proposal also establishes the Kentucky Racing Commission as the regulator for sports betting offered at racetracks, online or mobile within the state.
Sports-betting operators would pay an initial licensing fee of $500,000, with an annual renewal of $50,000. The legislation would impose a tax of 9.75 percent on gross revenue from bets placed at racetracks, while mobile wagers would be taxed at 14.25 percent, the same rates as in New Jersey.
Another gambling measure, House Bill 607, approved Wednesday sets taxes for all pari-mutuel wagering at 1.5 percent, including historical horseracing machines, simulcast bets and advance-deposit wagering. Koenig acknowledged that taxes would go down for some but up for others, but they would be consistent.
The measure is expected to increase tax revenues for Kentucky by $27m per year, Koenig said.
Also in the package of bills approved on Wednesday was a proposed ban on skill-based or grey-market machines, which look like slot machines and pay out cash prizes.
The supposed skill games are slot machines that exploit a grey area in Kentucky law and have “infiltrated every county and community in Kentucky,” according to bill sponsor Republican Representative Killian Timoney.
House Bill 608 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.
Kentucky Lottery Corporation CEO Mary Harville testified in favor of the bill, arguing there are now 1,504 machines in 397 lottery retailers in 72 counties and there are far more machines in bars, taverns and other locations.
Harville warned the continued proliferation of grey-market slots could cost the state almost $60m annually in lost lottery revenue.
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.
Republican Representative Kim Banta made a motion to consider a committee substitute to amend the bill to include regulations for grey-market games instead of banning them.
Bob Heleringer, a Republican who served in the House of Representatives from 1980 to 2002 and now represents skill-games company Prominent Technologies, testified in favor of the committee substitute, saying HB 608 in its current form has “constitutional issues.”
The committee substitute, Heleringer said, “does not run out a legitimate business in the state that has come in here and has invested in businesses all over this state.”
Representative Al Gentry, a Democrat, said although he supports legalizing and regulating grey-market games, he believes more information is needed before he can “make a logical decision” on any bill.
“It’s a complicated issue,” Gentry said. “I support gaming … what I don’t support is the process here.”
Gentry, who has been a co-sponsor of the sports-betting bill with Koenig, ultimately voted no and expressed regret that he could not support the committee substitute.
Banta’s committee substitute on the bill failed by a voice vote.
