Is Kentucky The Next State That Will Legalize Online Poker?

We’re barely two weeks into 2020, and a bill that would bring legal sports betting, daily fantasy sports, and online poker to the Commonwealth is already advancing through the Kentucky legislature.

The bill, sponsored by Rep. Adam Koenig, breezed through the House Licensing, Occupations and Administrative Regulations Committee on Wednesday with an 18-0 vote. A similar bill passed the same committee in 2019 but didn’t receive a floor vote.

As noted, the 2020 bill, HB 137, resembles last year’s efforts, but differs from it in two distinct ways:

  • Betting on in-state college is permissible
  • The addition of an Illinois-style 18-month in-person registration requirement

Online Poker Riding Sports Betting’s Coattails

Kentucky online poker is on BettingUSA.com’s radar, but as industry vet John Pappas pointed out on Twitter, the bill’s online poker component isn’t getting much attention.

As noted in the tweet, the bill:

  • Places the operation of online poker in the hands of the state lottery
  • Taxes online poker at a modest 6.75%
  • Doesn’t have any limitations on skins
  • Would be available to anyone 18+ in Kentucky (similar to lottery products)

One section also leaves the door for expansion into online casino games down the road:

“The president, and the board, may conduct an ongoing study of the operation and administration of lotteries in other states or countries, of online poker and other forms of online gaming… with a view toward implementing improvements that will tend to serve the purposes of this chapter.”

Under the Hood of Kentucky’s Sports Betting Bill

Of course, the centerpiece of the bill is sports betting.

On the sports betting front, HB 137 calls for:

  • Licensing fees of $500,000 with an annual renewal fee of $50,000
  • A retail tax rate of 10.25% and an online tax rate of 14.25%
  • Setting aside 5% of tax revenue (after regulatory costs) for problem gambling programs

The third bullet point is a nice addition that many other states that have or are considering expanded gambling have largely ignored.

Kentucky’s Mandate to Expand Gaming

Despite its reputation as a non-gaming state, Kentucky isn’t unfamiliar with online gaming. The state has been offering online lottery products since 2016.

Churchill Downs has long called the shots in the state, but most of its opposition has been to land-based expansion. The company appears to be fully on board with sports betting and online gambling (something it’s offering in other states), as it would benefit from both based on the structure of the legislation.

The bill will also benefit from a procedural rule. Kentucky requires a 2/3 vote for tax-related bills in a non-budget year, as was the case in 2019. The legislature needs a simple majority vote to legalize sports betting and online poker in 2020.

Furthermore, the political climate has changed following last year’s off-year election in Kentucky that brought a new administration into the governor’s mansion.

Kentucky’s New Pro-Gaming Expansion Governor

Newly elected Gov. Andy Beshear wasn’t shy about voicing his pro-gaming expansion opinions during a closely contested race with incumbent Matt Bevin, who was vehemently opposed to the idea of expanded gambling.

During a debate, Beshear expressed his support for expanded gambling:

“We lose over $550 million in revenue every year to those border states just on casinos before sports betting or any of the rest. If we expand gaming, we could put that money directly to the pension system.”

On Tuesday, during his State of the Commonwealth Address, Beshear went even further:

“A commitment to the future also requires that we create the new revenue to meet the growing needs of our state, and right now, we are watching more than $500 million in gaming revenue go across the border to states like Indiana, Ohio, and Illinois.

It is time to stop that flow, to use that money for our needs. Rep. Adam Koenig has filed a sports betting bill. I fully support it, and we should pass it.”

Upshot

The prospects of legal sports betting and online poker are very promising in the Bluegrass State.

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