The launch of sports betting in Kentucky is inching ever closer.
To be sure, no official rollout date has been etched in stone. (We'll have more on this shortly.) But the state continues to make major headway in the setup process. And this suggests they'll be able to finish preparing for legal gambling on a reasonable timeline. The latest development: settling on a Kentucky sports betting tax rate and revenue structure.
Granted, The Bluegrass State's gambling tax wasn't an extremely controversial issue. They wouldn't have approved legal sports betting in Kentucky if they believed it would be a hangup. But Governor Andy Besear signed House Bill 551 into law on something of a provisional basis. The state had yet to hammer out all of their official rules and regulations. The goal was to get an online sports betting bill approved and figure out the more nuanced details later.
Even now, as many hope the launch of sports betting will come sooner rather than later, Kentucky still has plenty to sort out. But their sports betting tax rate and structure is no longer among the remaining question marks.
What is the Kentucky Sports Betting Tax Rate?
It wasn't initially clear whether Kentucky would assess a flat sports betting tax or vary the rate by medium. Many other places in the United States charge retail sportsbooks one tax rate while levying a higher one upon online operators. Other states have shied away from that model. At the very least, they haven't been as aggressive as some of their compatriots when taxing online sportsbooks. Certain officials believe these mobile wagering companies will take their business elsewhere if the cost of operations are too high.
Kentucky no doubt discussed this prospective issue. However, they ultimately settled on a higher tax rate for bets with the best online sportsbooks. Here are the full details, courtesy of the Lexington Herald Leader:
"The bill that made sports betting legal in Kentucky applies a 9.75 percent excise tax rate to retail sportsbooks. They can be built at horse racing tracks in the Bluegrass State, along with Kansas Speedway. A Kentucky sports betting tax rate of 14.25 percent will be applied to online sportsbooks. Most states impose a higher tax rate on online sportsbooks, which in theory should have lower overheads than their retail counterparts."
Although some might do a double-take at the 14.25 percent tax rate for online sportsbooks, it is not actually that aggressive. States like Rhode Island (50 percent), Delaware (50 percent) and New York (51 percent) all charge much more. The same goes for Massachusetts (20 percent) and Virginia (36 percent), among other places. The Bluegrass State's tax falls smack dab in the middle—higher than places such as Kansas (10 percent) and Maine (10 percent), but still lower than the 15 percent levies in Maryland, Louisiana, Illinois, etc.
Kentucky's retail sports betting tax is similarly average compared to the rest of the United States. While places like Nevada (6.75 percent) and Michigan (8.4 percent) assess much smaller fees, they are in the minority. The overwhelming majority of states will legal sports betting charge at least a 10 percent tax to retail sportsbooks. That actually puts Kentucky's mark on the lower end of the spectrum.
Where will the Revenue Generated from Kentucky Sports Gambling Go?
Sports betting revenue is almost always divvied up among a bunch of different recipients and state programs. Kentucky has agreed upon a different model. All the funds they receive from sports betting taxes will go towards one place.
"The funds received from taxing sports betting Kentucky legal operators will go into the Permanent Pension Fund," according to the Lexington Herald Leader. "It provides retirement, disability, insurance and other benefits to more than 410,000 public servants in the Bluegrass State."
This may seem abnormal, if not a little unwise, on the surface. Shouldn't Kentucky spread the sports betting revenue around? In due time, depending on how much cash flow they generate, it just might. But Kentucky already generates tax revenue on sports betting adjacent activities at racetracks and casinos. Those funds are directed toward different state programs, such as education.
One thing that remains to be seen: Whether Kentucky will allocate any sports betting revenue towards gambling addiction programs. The immediate information doesn't mention any concrete numbers on this front. With that said, it's reasonable to assume a portion of sports betting proceeds will be funneled that way. After all, that's what every other state has done.
When will Kentucky Sports Betting Go Live?
As we mentioned at the top, Kentucky sports betting does not have an official launch date. And yet, the state does appear to be operating on a more expedited timeline.
Many officials are hopeful online sports betting in Kentucky will go live before the 2023 NFL season. That suggests The Bluegrass State is angling for a launch no later than September 2023, if not August 2023, when preseason football kicks off. There might also be a push to have sports gambling live in time for residents to bet on college football.
Still, even if Kentucky online sports betting isn't fully operational by the end of the summer, it's scheduled to go live before the end of 2023. House Bill 551 stipulates that all legal online betting sites in the state must be up and running no later than December 28, 2023. So there is a bright light at the end of an increasingly short tunnel.
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:
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