Kentucky Sports Wagering Legislation Clears Senate Committee for Initial Approval
The pursuit of authorizing sports gambling in Kentucky received a significant boost yesterday. This happened when a bill aiming to make Kentucky the 37th state to permit both on-site and online sports wagers swiftly sailed through the Senate Licensing and Occupations Committee, earning a 9-1 vote. The legislative process for this bill now involves a single Senate floor vote before it becomes law, a development anticipated to be endorsed by Governor Andy Beshear, especially given its emphasis during his 2019 election campaign. Wednesday's hearing marked the first instance a Senate committee considered a gambling bill, following the failure of a House bill from last year to secure a hearing as the legislative session concluded.
Hurdles Persist
Despite the lopsided vote exceeding anticipations, there are a couple of potent hurdles remaining before Kentucky residents no longer need to venture into one of the six bordering states to engage in legal gambling. First, the bill requires 23 affirmative votes in the 37-member Senate, since any revenue-generating or budget-appropriating bills in odd-year sessions require a three-fifths majority according to General Assembly rules. Second, time is running short for the bill to receive approval, as there are only four legislative days left in the session. A veto recess period, starting on Friday, could potentially offer a two-week window for supporters to gather the necessary backing, as the session reconvenes on March 29-30 to wrap up the 30-day session.
As he did after the House passed the bill with an almost 2-to-1 margin on Monday, Representative Michael Meredith revealed that they're still short of the required votes to pass the bill following the committee meeting.
If passed, Kentucky's nine horse racing facilities would be authorized to establish brick-and-mortar sportsbooks at their locations. Each could also collaborate with up to three mobile operators.
Shifting from 'Shadows' to 'Light'
Meredith outlined the bill's main features before the panel.
"What it does is it sets up a regulated environment for sports gambling," he stated. "It moves this activity out of the shadows and into the open."
The tracks would be required to pay an initial license fee of $500,000 and $50,000 per year for renewal. Operators would have to pay a $50,000 licensing fee and $10,000 annually for renewal.
Retail sports betting revenues would be taxed at 9.75%, while online revenues would be taxed at 14.25%. Most of the revenue generated would be allocated toward the state's pension plans, while 2.5% would go towards a problem gambling education and prevention fund - a first for Kentucky. Revenue and license money would also cover the KHRC's oversight of sports gambling.
The only eligible tax exemptions would pertain to the .25% federal excise tax imposed on each bet. Additionally, the bill would make it a Class C felony if anyone attempts to tamper with the outcome of an event.
The primary opponents of Kentucky's sports gambling bills have been the Family Foundation. Their leader, along with other religious leaders and gambling critics, spoke against HB 551 during Wednesday's proceedings.
Family Foundation Executive Director David Walls conveyed that legalizing sports gambling would resemble an "invasion of predatory gambling" and represent a step backward after lawmakers made an effort to prohibit so-called gray games or skill machines in the state. As they sought to prevent convenience stores from becoming "mini-casinos," allowing online sports gambling would create an estimated millions of virtual casinos in the hands of residents. He also called on legislators to safeguard children.
"Making no mistake, despite any efforts to shield children from this incredibly addictive form of gambling," Walls said. "Commercialized sports gambling harms children and fundamentally changes the way children perceive sports."
'My Constituents Demand This'
The discussion during the L&O committee meeting was brief. Some, like Senator Denise Harper Angel, felt the state has delayed income opportunities for far too long, while others, like Senator Donald Douglas, voted in favor to allow for continued debate on what he called "a complicated" bill for him.
Many, however, felt that legalizing sports gambling is appropriate given that six of Kentucky's seven neighbors already permit it, and data from GeoComply indicates that thousands of Kentucky residents are crossing state lines to place wagers in those states.
"We cannot stop individuals from engaging in harmful behaviors," Majority Floor Leader Damon Thayer said to justify his vote. "There are many behaviors prevalent today that, when practiced excessively, have detrimental effects on people, but my constituents demand this. The people of Kentucky demand this. It's about time we provide them the freedom to exercise their free will - a divine gift – to participate in legal sports gambling."
The lone "No" vote in the committee was from Chairman John Schickel, who did not expound on his vote. Schickel had also chaired the committee last year and declined to schedule House Bill 606 - last year's sports gambling bill - for a hearing during the session's final days. The bill was later moved to another committee but was not heard before the session ended.
