The regulatory structure of Kentucky sports betting is about to undergo a significant change.
Earlier this month, House Bill 281 garnered the necessary votes and was recently signed into law by Governor Andy Beshear. The initiative will reorient how sports gambling is monitored in the Bluegrass State. Mainly, it will shift around the responsibilities of the Kentucky Horse Racing Commission, which currently oversees all matters related to legal sports betting in Kentucky.
What does this change actually mean for sports gambling operations in the Bluegrass State? Does it impact bettors at all? Why are policymakers deeming a realignment of sports wagering regulations necessary?
Let’s get into it all.
A New Kentucky Sports Betting Regulatory Arm is being Created to Oversee the Industry
The biggest takeaway from the passage of HB 281: The formation of a Division of Sports Wagering. This department will now take on a lion’s share of the obligations when it comes to oversight of sports betting in Kentucky. Here is Brad Senkiw of Covers.com with the full details:
The new Division of Sports Wagering will be managed outside of the Division of Pari-Mutuel Wagering, which has been the regulator for sports betting since it was legalized last March. The law also created the Division of Compliance, which will take on the duties of auditing revenue received by the commission instead of the pari-mutuel division handling it. ‘The Racing Commission, which is already at the top of its game in regulating the live portion of our industry, needs to be well versed in and be able to adequately, efficiently, regulate the other forms of gaming that the General Assembly has legalized, like sports wagering,’ Kentucky Thoroughbred Association director Chauncy Morris told WEKU last month.”
Critically, HB 281 was a thoroughly bi-partisan initiative. It was sponsored by Republican Representative Michael Meredith and Democratic Reps. Al Gentry and Cherlynn Stevenson. When it was put to an official vote, it had no trouble making it through the House or Senate. The bill passed in the House 84-2 and then made it through the Senate 37-1.
Why is Kentucky Making This Change to Sports Gambling Oversight Now?
Two factors are driving the shifts in Kentucky sports betting regulation in 2024.
Most notably, the expansion of Kentucky sports gambling has created more revenue streams and processes that need to be monitored. Kentucky online sports betting launched in September in 2023, and according to Governor Beshear, it is expected to generate nearly $25 million in additional tax revenue per year.
As it turns out, though, these projections may fall on the modest end. The Kentucky Horse Racing Commission announced the Bluegrass State took in $546.6 million in total bets during February 2024. They also said, per Senkiw, that Kentucky sports betting tax revenue generated $15 million through the first three months of online wagering. While the state may not maintain this pace, it currently puts them on track for $60 million in additional revenue per year.
Granted, this profit margin cannot solely be attributed to online sports betting in Kentucky. Retail business accounts for a share of those funds, as well. Still, online sportsbooks in the United States now represent a majority of the country’s sports gambling handle. The Bluegrass State won’t be any different. As such, Governor Beshear’s initial projections of $23 million in revenue from online wagering are presently on course to be blown out of the water. Not only does managing that much extra money require due diligence, but the uptick in overall betting as a result needs additional oversight, too.
Essentially, the Kentucky sports betting market is on a meteoric rise. And because of this, lawmakers have decided it makes sense to compartmentalize responsibilities and expand the departments associated with sports betting.
Kentucky Online Sports Betting Isn’t the Only Gambling Sector on the Rise
Another driving force behind the proposal and passage of HB 281: The impact Kentucky sports betting is having on racetracks.
Certain officials noted back in January 2024 that the rollout of online sports gambling in Kentucky was having a positive effect on the racetrack business. This was a revelation to many. After all, many expected the introduction of online sports betting to hurt on-site gambling properties such as racetracks.
However, as part of the online sports betting rollout in Kentucky, a number of racetracks were granted general sports gambling licenses of their own. This allows them to accept wagers across all events and leagues rather than just the races taking place on-site. And that, in turn, has apparently increased foot traffic.
What’s more, people apparently aren’t just visiting racetracks to bet on other sports. Entering the facilities renders them more likely to stick around and/or bet on Kentucky horse racing. Somewhat unexpectedly, then, Kentucky online sports wagering and Kentucky horse race betting now have a symbiotic relationship.
Financially speaking, this is great news for tracks, sportsbooks and the state’s revenue. Functionally speaking, though, it complicates the obligations of the Kentucky Horse Racing Commission. Having to oversee the launch of online sports betting while also tending to an increase in racetrack business is a lot. This new structural setup should, in theory, make the exponential growth of the Kentucky sports betting market easier for regulators to effectively monitor.
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