Kentucky sports betting bill passes out of House committee by unanimous vote

A bill to legalize and tax wagering on sporting events in Kentucky passed through a state House committee by a unanimous 18-0 vote on Wednesday, with good odds that it will soon clear the full chamber.

House Bill 137, sponsored by Rep. Adam Koenig, R-Erlanger, would set up a regulatory framework for residents to legally bet on sports — in addition to playing online poker and fantasy sports contests.

The estimated annual revenue, about $22.5 million, generated from taxes and licensing fees would go toward Kentucky’s underfunded pension system.

The bill passed the House Licensing, Occupations and Administrative Regulations Committee, just as it had in last year's legislative session, when it wasn't called to a vote on the House floor.

Koenig identified one key difference of this year's bill: It will allow people to bet on in-state sporting events, such as University of Kentucky and University of Louisville basketball games.

Previously: Could Kentucky see sports betting in the near future?

Twenty states have now legalized sports betting after a 2018 U.S. Supreme Court decision gave them the jurisdiction to do so. Koenig pointed out that Kentucky is "largely surrounded" by states that have already taken that step to tap into some of the estimated $150 billion of illegal sports wagering in the country each year.

Sports wagering is already legal in Indiana and West Virginia, has been legalized but is not yet in effect in Illinois and Tennessee, and is expected to be passed into law in Ohio this year, Koenig said.

"It has taken off quite quickly, and obviously a lot of folks see the revenue potential and opportunity to allow individuals to do something legally that they are currently doing illegally," Koenig said.

Under the bill, the Kentucky Horse Racing Commission would regulate sports wagering, with only horse racing tracks and the Kentucky Speedway eligible to receive a license at an initial fee of $500,000 and annual renewal fee of $50,000.

Wagering would be taxed at a 10.25% rate at those properties, where individuals could also download an app on their phones to wager online from anywhere, which would be taxed at a higher 14.25% rate.

Such tax revenue would go first toward the cost of regulating sports wagering, with 5% of the remaining funds directed to programs tackling gambling addiction and 95% deposited in a permanent fund to assist state payments for public pensions.

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Rep. Al Gentry, D-Louisville, a co-sponsor of HB 137, said the revenue generated "is not going to solve our challenges, but it is a good first step."

An updated fiscal analysis by consultant group Commonwealth Economics estimated HB 137 would create annual revenue of $22.5 million for Kentucky from sports wagering alone. The group's study from 2019 had that figure as $20 million, but Koenig indicated the increase was because the new version of the bill allows bets on in-state sporting events.

The study showed Indiana is on pace to generate more than $11 million in annual tax revenue from sports betting, but Commonwealth Economics founder John Farris told the committee that Kentucky's bill was unique in its ability to tap into online wagering revenue.

This year's study was again commissioned by the Keeneland horse track in Lexington, which stands to benefit as one of the licensees for sports wagering.

Martin Cothran of the Family Foundation of Kentucky testified against the bill, saying gambling would not only lead to negative "societal effects," but it would violate the state constitution's prohibition of gambling outside of horse racing, charitable gaming and the state lottery.

Koenig countered that delegates at the Kentucky's 1890 constitutional convention specified that while betting on "games of chance" would be prohibited, betting on sporting events like baseball would be allowed, as they are "games of skill."

Previous coverage: Matt Bevin points to suicides as a reason to oppose gambling

House Minority Floor Leader Joni Jenkins, D-Louisville, one of the co-sponsors of the bill, said Wednesday she thinks the House may pass the bill as early as this Friday.

The Senate may pose a significant hurdle for the bill — the legislation did not even receive a hearing in the chamber last year.

Republican Senate President Robert Stivers said Tuesday he did not know if the bill would have a chance of passing in his Republican-dominated chamber.

"I’m neither for or against it; I’m somewhat ambivalent," Stivers said. "I think it generates some money, but very little in the overall context of the budget.”

Asked about the bill's odds in the Senate, Koenig said he was still focused on getting it out of the House, but noted the creation of Kentucky Sports Betting Now, a new advocacy group that hopes to push legislators to support his bill.

"I think we're going put forth the effort to give folks that want to vote for it the cover so they can," Koenig said.

Kentucky Sports Betting Now issued a press release listing a wide variety of groups in support of the bill, including the Kentucky Education Association, Kentucky Chamber of Commerce, Greater Louisville Inc. and Kentucky Professional Fire Fighters.

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Reach reporter Joe Sonka at jsonka@courierjournal.com or 502-582-4472 and follow him on Twitter at @joesonka. Support strong local journalism by subscribing today: courierjournal.com/subscribe.