Kentucky Sports Betting Market Keeps Growing

Ever since Kentucky sports betting launched in September 2023, the results have consistently exceeded expectations. So much so, in fact, it has prompted regulators and legislators to adjust their forecasts.

Guess what? These new estimates are being obliterated, too.

“In July alone, sports wagering excise tax collections grew 14 percent year over year,” Hannah Simms, the director of sports wagering at the Kentucky Horse Racing and Gaming Corporation, explained following The Bluegrass State’s most recent revenue report (via Spectrum News 1). As a reminder, these reports typically run a couple months behind present. Through September, most states have only released revenue updates accurate through June or July.

A 14 percent tick up is nothing new for sports betting in Kentucky. Growth remains near-constant, not just year-over-year, but month-over-month. A huge spike in July is truly absurd. That is known as one of the quieter periods in the sports betting calendar.

Sure, the MLB playoffs are right around the corner. But the NBA and NHL seasons have long since wrapped. The U.S. Open is still a month away. The Ryder Cup is closer to two months away. And betting on the NFL does not crescendo towards its peak until sometime in August.

Enjoying such a big-time year-over-year bump in July, specifically, is nothing if not a harbinger of Kentucky sports betting’s popularity. And the lifetime sports betting volume in The Bluegrass State backs that up.

Kentucky Sports Betting Handle is Going to Surpass $5 Billion

If you had polled an expert or state legislator or anyone really back in 2023, when Kentucky sports betting first launched, you would be hard-pressed to find anyone forecasting $5 billion in total bets would be placed by the time wagering was live for two years. Heck, you would have struggled to find someone legitimately to project $4 billion, maybe even $3 billion.

And yet, here we are. Kentucky is on pace to shatter even the wildest expectations.

“Since becoming legal two years ago, Kentuckians have wagered close to five billion dollars on sports betting, according to the Kentucky Horse Racing Commission,” writes Mason Brighton of Spectrum News 1. “Nearly all of it is done on phone apps like DraftKings or FanDuel. The state’s public pension fund received $73 million of that, and $2 million was given to problem gambling aid.”

In all likelihood, this undersells the state’s betting handle. Kentucky is so far reporting volume through July 2025. For the year, the state has accepted over $1.5 billion in total bets. That brings their lifetime betting handle to just over $5 billion.

And again, this does not include August. The Kentucky sports betting handle for the first two full years will almost assuredly top $5.2 billion.

That is a monstrous number. By our estimation, it is close to double of what most projections laid out a few years ago. What we are seeing is not just a market beating expectations. It is reinventing them, and then needing to reinvent them again.

Could Kentucky Look to Raise The Sports Betting Tax?

Of course, with two years of data in the books, The Bluegrass State is also starting to look at what could be better. Problem gambling treatment and prevention is a bigger sticking point than ever. The same goes for how much access Kentucky online sportsbooks have to customers. There have been murmurings of imposing individual gambling limits, requiring operators to do extensive financial background checks of consumers and restricting how companies are allowed to advertise and market.

Beyond that, state legislators seem a little itchy to raise the Kentucky sports betting tax. The notion gets recirculated whenever people bring up just how small the state’s piece of the gambling pie has become.

“‘Amounts bet on these slot machines in our state — the amounts are just booming. However, the actual revenue that’s going into the state and benefiting Kentuckians remains really low,” said Patience Martin, who is the state tax and budget policy fellow with the Kentucky Center for Economic Policy. A recent report from the left-leaning Kentucky Center for Economic Policy found that tax collected on machines in other states outpaces Kentucky.

“Of the $11 billion wagered on horse racing in 2025, the state collected less than $200 million in taxes. About half of that money goes to the state’s general fund; the rest supports the horse racing industry. ‘We could be generating millions more dollars annually to put toward important state investments if we were to just continue to just move toward taxing them at a rate even just comparable to our neighboring casino states,’ Martin said.”

To this point, legislators have not put anything official in motion to raise the Kentucky sports betting tax. But the move feels inevitable when looking at how much money is being bandied about in the market.

Kentucky May Have the Leverage to Make Something Happen

Hiking taxes while sportsbooks are still mid-contract is always tricky. However, Kentucky may be on track to exert a ton of leverage.

At its current pace, The Bluegrass State sports betting handle in 2025 will top $3 billion. That would be a 19-plus percent increase compared to 2024. What’s more, it would bring the lifetime Kentucky sports betting handle to around $6.5 billion or more.

That volume is high enough for sportsbooks to concede a little. Especially when you consider the state continues to rank as a growth market.

Granted, this doesn’t guarantee anything will happen. Kentucky legislators may have to wait until licensing contracts are closer to expiration. At one point or another, though, we should brace for a substantial tax hike. The Kentucky sports betting market is proving to be that lucrative.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: