Last Friday, Kentucky officially joined the states that have already legalized sports betting after Governor Andy Beshear signed HB 551 into law. The legislation was introduced several weeks ago and quickly earned the approval of the House and the Senate. The bill cleared the Senate chamber by a 25-12 vote, while it needed at least 23 votes to pass.
Sports Betting Tax Rates and Licensing Fees
The recently approved bill sponsored by Rep. Michael Meredith, R-Oakland allows the Kentucky Speedway and horse racing tracks to operate as sports betting shops as long as they pay an upfront fee of $500k and an annual fee of $50k. Each horse racing track is allowed to partner with up to three online sports betting companies, which means that up to 27 online sportsbooks could operate in the state.
An excise tax of 9.75% would be imposed on bets placed at tracks, while online wagers would be taxed at 14.25%. The Kentucky Horse Racing Commission will be responsible for regulating sports betting operations, and the revenue from sports betting activities will be used to cover regulatory costs, support problem gambling programs, and the state pension fund. The bill will come into effect on June 28.
But the bill does not include tribal provisions, which means that neither of the state’s two tribes will qualify for a state gaming compact under the 1988 Indian Gaming Regulatory Act. This is a notable flaw considering that many states have been trying to establish gaming compacts with recognized tribes in recent years.
The Legalization of Sports Betting Evokes Mixed Feelings among Legislators
Meredith explained that the approval of the bill recognizes the proliferation of the sports betting industry in the United States. Democratic Gov. Andy Beshear has been a proponent of the sports betting legalization plans for a long. He signed the sports betting and medical marijuana bills on the same day, demonstrating his commitment to attracting fresh tax revenue to the state. In a press conference, the Governor explained that the new law allows Kentucky to be competitive with its neighboring states.
Supporters of the bill added that the sports betting industry has the potential to generate about $23 million a year in revenue and license fees. Republican Senate Majority Leader, Damon Thayer added that Kentuckians want to be able to wager on a sporting event, just like the people residing in surrounding states, and many surveys come to prove this.
Senator Whitney Westerfield, however, opposed the bill, explaining that there are people who will wager on sports although they cannot afford to lose money. He was not the only one who condemned the bill. David Walls, executive director of the Christian social conservative group The Family Foundation, called the legalization of sports betting in Kentucky a “lose-lose” situation, highlighting the impact of gambling problems on families.