Kentucky Sports Betting May Change Forever

Kentucky sports betting may never be the same.

House members from The Bluegrass State passed legislation last week that materially changes how the market defines wagering. Representative Michael Meredith is the primary sponsor behind House Bill 904 (HB 904). Among other things, it seeks to raise the legal age for sports betting in Kentucky to 21 and ban under bets on player props for college athletes inside the state.

Experts almost universally believe that if it’s signed into law, Representative Meredith’s measure will result in a mass exodus of Kentucky sportsbooks. As Matthew Waters explains for Legal Sports Report:

“The problem of HB 904 is that it places strict rules against prediction markets that would leave the state with a much different looking sports betting market if the bill is passed into law. ‘We also say that if you are a licensee under the bill through sports wagering, a horse racing track or a fantasy sports operator, for the next year you can’t operate a prediction market in Kentucky,’ Meredith said at Thursday’s floor vote. ‘After [July 1, 2027], you’re not allowed to be involved with or in business as a prediction market operator anywhere else in the country if you’re licensed under one of our licensee structures here.’”

The final comment from Meredith underscores the core issue. HB 904 does not just stipulate sportsbooks cannot run prediction markets in The Bluegrass State. This is blanket logic that applies to the entire country.

A few years ago, this would not be seen as an extreme position. These days, however, it is a different story.

Many Kentucky Sports Betting Operators Have Entered the Prediction Market Business

If you need any proof that online sports betting sites in the United States have clocked the rise of prediction markets, you are receiving it in heaps from the most popular operators. The two highest-grossing betting sites in the U.S. are FanDuel and DraftKings. Both of them launched prediction markets in states without legal sports betting over the past year.

Under the terms of HB 904, they must shudder those operations or exit the Kentucky sports betting market. Naturally, they are pushing back against the bill’s viability. They are joined by Fanatics sportsbook as well, which also runs prediction markets elsewhere. As Waters writes:

Unsurprisingly, those three are not interested in exiting the growing predictions market just to offer betting in Kentucky. They submitted joint testimony to the House Licensing, Occupations and Administrative Regulations Committee explaining exactly that. ‘We are concerned that this legislation may have significant consequences that could materially disrupt the Commonwealth’s successful sports wagering market,’ the letter reads. ‘As currently drafted, section 20 would gut the regulated sports betting market and force the exit of most, if not all, existing regulated operators from the Commonwealth. This would cost the state more than $40 million in tax revenue every year – money that goes to fund teacher pensions, among others. Kentucky adults would also lose the freedom to use a popular form of entertainment on their preferred regulated sportsbook.’”

This sounds like a persuasive argument from Kentucky sports betting operators. The reason is simple: It is a persuasive argument. And the math backs it up.

Proposed Sports Betting Bill Could Gut Kentucky’s Revenue Stream

Kentucky sportsbooks have a ton of leverage when digging into The Bluegrass State’s market share over the past few years.

Legal sports betting in Kentucky launched back in 2023. Since then, the state has earned over $105 million in tax revenue, according to publicly available data. Of that money, Waters writes that $81.2 million alone has come from FanDuel and DraftKings. That comes out to more than 77 percent of Kentucky’s entire sports betting revenue stream.

If HB 904 gets signed into law, it effectively pushes all of that money off the market. What’s more, this is only the tip of the iceberg. Other operators, such as Fanatics, would probably leave as well.

When all is said and done, over 85 to 90 percent of Kentucky sports betting tax revenue might walk out the door. While the state can hope other operators will replace it, this is unlikely to happen.

Sure, the demand for sports betting in Kentucky isn’t going anywhere. But this isn’t just about demand. It is about access. FanDuel and DraftKings, in particular, are recognizable names with immeasurable reach. Even if you have other Kentucky sports betting operators to pick up the slack, customers may not be as inclined to use them. At the very least, they will not be as aware of them.

Is Kentucky Sports Betting About to Change Forever?

So, with all this in mind, will HB 904 be ratified by the Senate and signed into law? We obviously cannot be certain. But we would definitely be surprised if it has the necessary support.

Perhaps the moment it has from the House spills over into the Senate. The fact that Governor Andy Beshear also regrets supporting sports betting legalization is a big deal. HB 904’s crackdown on sportsbooks and how they conduct business will be welcome by many.

Still, the state doesn’t have enough leverage, in our estimation, to make it happen. The Kentucky sports betting market isn’t a flagship one. Operators want to be in it. They will not abandon revenue opportunities across 11 other states just to stay in it.

That reality should ultimately push Senate members toward knocking HB 904 down. Color us shocked if it doesn’t. Then, paint us every shade of flabbergasted if sportsbooks agree to it. Because if they do, it won’t just be Kentucky sports betting that’s never the same. The entire industry will be altered when other states inevitably follow suit.

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