Kentucky state Rep. Adam Koenig has once again filed legislation seeking to legalize sports betting in the state.
The Erlanger Republican has filed similar legislation previously. Last year, the state Licensing, Occupations, and Administrative Regulations (LOAR) Committee, which Koenig chairs, unanimously approved the bill. However, it never received a floor vote in the state House of Representatives.
This year’s version, House Bill 241, looks very similar to last year’s legislation. In addition to legalizing sports betting, it also provides the framework to regulate online poker and daily fantasy sports. The Kentucky Horse Racing Commission would regulate sports betting in the state. The state’s Public Protection Cabinet would oversee daily fantasy, and the Kentucky Lottery Corp. would administer online poker.
The state’s horse and harness racing tracks would be eligible to receive sports betting licenses as well as any professional sports venue that seats 50,000 or more fans. Only the Kentucky Speedway, located roughly halfway between Louisville and Cincinnati in Sparta, meets that criteria.
The bill, filed officially on Saturday, allows each licensed facility would to operate a retail sportsbook and an online application. Anyone seeking to bet using a mobile device would need to register in person at the affiliated retail venue until Jan. 1, 2023.
The proposed tax structure closely resembles New Jersey’s in that revenue from retail is taxed at a lower rate. Sportsbooks’ adjusted gross revenue from the brick-and-mortar establishments would be taxed at 10.25 percent, with .5 percent of that going toward racing development funds.
The state would tax online betting at 14.25 percent of AGR.
Kentucky is nearly surrounded by states that offer sports betting. Of its seven neighbors, it’s currently available in Illinois, Indiana, Tennessee, and West Virginia. Virginia expects to launch by the Super Bowl. Ohio had a bill pass the state House last year, but failed to clear the legislature, and Missouri lawmakers are also considering legalization.
Plenty of Challenges Ahead
As previously reported, sports betting faces an uphill battle in the Kentucky General Assembly this year because of COVID and other reasons. First, legislative leaders chose to keep committee meetings to an hour each, allowing workers to clean conference rooms between hearings.
Second, legislative leaders have placed a priority on other bills in this session. That includes bills that would give legislators more input and authority over emergency executive orders. Lawmakers also must pass a one-year budget this year since the General Assembly held off from passing a two-year plan last March, citing the uncertain economic forecast.
Those bills have eaten into the odd-year 30-day session that started last week. Typically, lawmakers in odd-year sessions hold organizational meetings for three or four days. Then, they recess for the rest of the month. This year, legislative leaders scheduled a Saturday session this past weekend and plan to meet through this Wednesday.
That means when lawmakers return to Frankfort in February, they’ll have just 22 days left in the session, which must end by March 30.
In addition, legislative leaders have said historical horse racing (HRR) legislation needs to take priority as lawmakers must find a way to allow the KHRC to permit and oversee the slot-like machines. Last fall, the Kentucky Supreme Court issued an opinion saying the games do not meet the definition of pari-mutuel gaming.
The bill, though, does have some prominent backers. On Monday, Kentucky Government Retirees President Jim Carroll tweeted a statement endorsing it.
Kentucky Government Retirees supports HB 241 as a common sense measure to tax an existing activity in Kentucky while helping fund pensions,” Carroll tweeted.
It’s uncertain though if the money from sports betting would be used to help alleviate the state’s public pension concerns. According to the Kentucky Retirement Systems 2020 Summary Annual Financial Report, the state’s pension plans had an unfunded liability of $28.3 billion.
Last year, officials expected sports betting to generate $22.5 million in annual tax revenues.
More Co-Sponsors Expected to Join
HB 241 was initially assigned to the House Committee on Committees, a group that includes Republican and Democratic House leadership. In a text Monday, Koenig told Casino.org he expects the bill to make it to his committee during the session.
The current bill has just five co-sponsors, all of whom either serve on the LOAR Committee or the Interim Joint LOAR Committee that meets between sessions. Lawmakers expect that to grow.
Last week on KET’s Kentucky Tonight, House Minority Leader Joni Jenkins, D-Shively, said she expected most of her caucus to sign on as sponsors. Kentucky Gov. Andy Beshear, a Democrat, is also a vocal supporter.
Last year, of the bill’s 42 sponsors, 30 were Democrats. However, of those Democratic sponsors, 10 are no longer in the House. Nine of them either lost to Republicans in November’s election or did not run for re-election and saw a Republican pick up the seat.
It’s almost a certainty the bill will need a significant amount of Republican support to pass the House. The GOP controls 75 of the 100 seats in the chamber. So, even if all 25 Democrats support it and 25 of Koenig’s Republican colleagues do as well, that still means nearly two-thirds of the majority caucus does not.
There is some good news on that front. One of the new co-sponsors is freshman state Rep. Killian Timoney, R-Lexington. Timoney took over a district previously held by state Rep. Stan Lee, who was regarded as one of the most ardent social conservatives in the House.
Even if the bill did not pass in this session, Koenig and supporters could use the time in Frankfort to educate members, especially newly elected ones, on the merits of legalized sports betting. That could set it up for passage in 2022.
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