kentucky gaming expansion delay
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Kentucky Gaming Expansion Left Out of Budget

Kentucky gambling expansion will have to wait even longer after lawmakers passed an abridged budget for the upcoming fiscal year in response to the coronavirus outbreak.

The vote ends what seemed even just a month ago like a promising avenue for legal sports betting and online poker in 2020, and the opening for further expansion in one of the few remaining states without any casinos.

With the virus obfuscating the commonwealth’s revenue projections, lawmakers Wednesday overwhelmingly approved a pared-down budget to keep the government operating through June 30, 2021, instead of the two-year budget plan elected officials typically advance during a legislative session in even-numbered years.

After preparing earlier this session to increase government spending, legislators took a more somber tone as they pushed for a reduced version Wednesday afternoon. Senators were seated far apart from one other during a series of budget votes, spacing out between desks which usually sit side-by-side. Each Senator was allocated a bottle of hand sanitizer produced by a state distillery. At least one wore a mask.

The floor of the House, which approved the budget through remote votes a few hours after the Senate, was virtually empty.

Facing what lawmakers from both parties called an “unprecedented” budget crunch, the General Assembly nevertheless advanced the budget without gaming expansions, which backers argued would generate millions of dollars in revenue and thousands of new jobs.

“We will have those fights,” said Senate Minority Leader Morgan McGarvey before his vote, “but we need a plan now.”

Gambling Remains Divisive

McGarvey lamented the gambling exclusion along with several other Senate Democrats ahead of Wednesday’s budget votes.

While acknowledging the coronavirus outbreak had forced lawmakers to take unparalleled measures in the budget, McGarvey questioned why his colleagues would leave out a possible new revenue source such as legal real money poker, sports betting or casino gaming. That was reiterated by Sen. Reginald Thomas, who asked legislators to find “the will and courage” to pursue new revenues such as gambling for future budgets.

In conclusory remarks before the primary budget vote, Senate President Robert Stivers echoed the remarks of a handful of Republican senators who dismissed the potential for gambling, saying that the state horse racing tracks were closed by the virus anyway. He didn’t address online gaming, which makes up the bulk of revenues for states such as New Jersey and Pennsylvania that permit mobile sports betting, poker and casino games.

A best-case scenario for Kentucky online gambling revenues would be just a small portion of Kentucky’s budget, which was projected to eclipse $35 billion before the outbreak. Still, prominent Democrats in the General Assembly, along with Gov. Andy Beshear, argue that any new revenue could help with government coffers facing such a bleak future.

The latest failure to advance a gaming expansion measure is all the more frustrating for backers after they seemed to gain traction earlier this year in the Republican-controlled House.

Kentucky Gambling Background

With the notable exception of its iconic horse racing industry, Kentucky has largely eschewed new forms of legal gaming since it approved a lottery in the late 1980’s, even as neighbors such as Ohio, Indiana and Illinois have opened commercial casinos in the decades since, several of which sit within a few miles of its state lines. Kentucky remains one of the most conservative politically and culturally in the country and elected officials have largely reflected those positions in Frankfort.

That long-standing opposition seemed like it may thaw in recent years. Lawmakers introduced sports betting bills in each of the last three legislative sessions, and earlier this year Beshear took office, explicitly supporting not just the wagering bills, but full-scale commercial casino expansion.

Though the casino bills were essentially dead on arrival in the Republican-controlled General Assembly, GOP Rep. Adam Koenig spearheaded a proposal to allow sports betting via the state’s horse tracks. Though sports betting, a relatively low-margin offering, wouldn’t necessarily spark a gambling revolution in the Bluegrass State, it was nevertheless a first step toward more consequential expansion.

The bill passed unopposed out of a committee chaired by Koenig, but it ran into opposition before even getting to the full House floor. Despite support from House leadership and the majority of Democrats, the bill was opposed by pockets of the GOP caucus still opposed to any new form of gambling. After months lingering on the floor without a vote, the bill was referred back to the committee in March, effectively ending its hopes for 2020.

Wednesday’s budget, which includes no new monies for legal gambling, ends any last hope for legal sports betting in the commonwealth this year.

Future Remains Uncertain

Elected officials will now make due with a revenue stream that remains undetermined.

Lawmakers admitted Wednesday they were essentially flying blind trying to allocate 12 months of state funding with little idea how badly COVID-19 would sicken residents and drain government coffers. The trimmed-down, single-year budget gives politicians a narrower target to work with, but even the most optimistic of projections leaves unmatched challenges.

Before the budget votes, several legislators hinted Beshear may call a special session later this year to further address the budget, the commonwealth’s coronavirus response and other unfished business cut short by the curtailed session. Others seemed resigned that they wouldn’t reconvene until the start of the regular session in 2021.

In either scenario, it could be months before the General Assembly passes another bill of significance. Beshear, and his allies in the legislature, are sure to continue pushing gambling measures as an economic lifeline, but with more pressing issues facing Kentucky (and the nation) it seems those proposals would take a back seat to any future session – especially after lawmakers punted on a chance to expand gambling already.

As Sen. Stivers noted during his address on the budget, Kentucky’s horse tracks are closed indefinitely. The Kentucky Derby has been delayed until at least August. Even if approved in the budget, any brick-and-mortar gambling venue would be months or even years from generating revenue. Online gaming would have a quicker timeframe, but may be a far more difficult sell in the conservative legislature.

Still, on a dispiriting day in the legislature, gaming backers had reason to be particularly glum. Kentuckians inside and outside the General Assembly may warm to legal gambling, but Wednesday’s budget vote assures it will be pushed further into the future.

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