Kentucky has seen the introduction of numerous sports betting bills, but none has yet managed to make it past the finish line and become law. However, recent Kentucky sports betting efforts have elicited the support of numerous lawmakers and Governor Andy Beshear. In all likelihood, it is just a matter of time before Kentuckians have access to legal sportsbooks and betting sites.

Currently, legal forms of online gambling in Kentucky include parimutuel horse racing betting, daily fantasy sports and online lottery games. The Bluegrass State is also home to numerous horse racing tracks, including the famous Churchill Downs, home of the Kentucky Derby.

Kentucky is home to a strong anti-gambling expansion contingent of lobbyists, but the momentum seems to be on the side of lawmakers who would like to legalize retail sportsbooks and online sports betting. Lawmakers have also expressed an interest in passing legislation to authorize online poker.

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Sports Betting in Kentucky

Kentucky does not yet have legal sports betting, but that is looking increasingly likely to change with each passing year. Shortly after the Supreme Court overturned PASPA, Kentucky formed a bipartisan panel consisting of six representatives and three senators to study legalization and then craft legislation to that end.

Since then, lawmakers have filed numerous pieces of legislation that would legalize retail sportsbooks and mobile sports betting in Kentucky. None of those bills have made it into law, but the sheer number of efforts indicates a clear desire among lawmakers to legalize sports betting.

Kentucky sports betting also has the support of Governor Any Beshear, which clears one important hurdle for any bill that is approved by the legislature: acquiring the signature from the governor. With the support of numerous lawmakers and the governor, the odds of legal sports betting coming to Kentucky look good.

House Bill 137 was introduced in January 2020 to legalize retail sportsbooks and mobile betting. Under this bill, Kentucky would have authorized retail sportsbooks at racetracks and Kentucky Speedway. Licensed operators would also be permitted to offer mobile betting in partnership with third-party providers such as FanDuel and DraftKings.

In addition to sports betting, HB 137 sought to authorize online poker and to formally legalize daily fantasy sports. The wide-ranging bill garnered the support of Democrats in the Senate and Governor Andy Beshear but was opposed by Republicans in the House at the urging of the Kentucky Family Foundation.

HB 137 largely resembled a bill introduced in 2019 but would have limited in-person registration requirements to just 18 months and permitted wagers on collegiate events.

HB 175 called for Kentucky to regulate sports betting, fantasy sports and online poker. The bill would have allowed racetracks and professional sports venues to apply for licenses to operate retail sportsbooks and mobile betting platforms.

Under HB 175, sports wagering would have been regulated by the Horse Racing Commission, online poker by the KY Lottery and fantasy sports by the Public Protection Cabinet.

Bill Request 15 was introduced in September 2018 and suggested a number of sensible regulations such as giving the Kentucky Lottery Corporation regulatory oversight, establishing a minimum age of 18 and prohibiting insiders from betting on their own sports.

The bill did not discuss tax rates at all, so hopefully legislators have learned since their previous attempts that the issue of tax rates needs to be studied more carefully. Lawmakers are keen on taxing sports betting if they legalize it, but nobody gains if the tax rates are so high that they prevent sportsbooks from even staying in business.

Bill Request 29 was introduced in June of 2018 as an effort to legalize, regulate and tax sports betting in Kentucky. The bill looked promising in most regards but suffered one fatal flaw. It repeated a mistake found in a similar piece of legislation introduced the year before: a large tax on total betting handle.

The June 2018 bill called for a 3% tax on betting handle, which means the tax would be applied to the total amount wagered at KY sportsbooks. Because sportsbooks only keep somewhere in the range of 4-5% of total betting handle after paying out winners, assessing a 3% tax is tantamount to taxing operators more than 50% on net revenue.

Another bill, House Bill 536, was introduced in February of 2018 and sought to legalize wagering on professional and collegiate sports for customers 18 and older. The Kentucky Lottery Corporation would have overseen sports betting under that bill had it not stalled in committee.

A bill first introduced by Senator Julian Carroll in September of 2017 sought to legalize sports betting now that the federal prohibition of sports betting has ended. That bill has since stalled without further action.

BR 155 would have amended Kentucky gambling laws to allow sports wagering, enacted a $250,000 licensing fee for operators, set a 20% tax on betting handle and establish the Kentucky Horse Racing Commission as the agency in charge of regulating sports betting.

The bill’s call for a 20% tax on betting handle was a non-starter. Charging 20% on betting handle is entirely too high considering the average sportsbook in Nevada is only able to retain 5% of total betting handle after paying out winnings. A 20% tax on handle would have made it difficult if not impossible to run a profitable sportsbook. The positive takeaway from the bill was it was at least a way to start the conversation.

For the bill to take effect, it plainly stated the federal Professional and Amateur Sports Protection Act (PASPA) must be repealed, amended or stricken down in such a way to make it legal for Kentucky to regulate sports betting. After the Supreme Court ruled against PASPA in May of 2018, it opened the pathway for this bill to make real progress.

At the time the bill was introduced, the most likely avenue for PASPA to be ended was a Supreme Court case pitting New Jersey against the major North American sports leagues. New Jersey had passed a law effectively legalizing sports betting, and the sports leagues sued to stop the law from taking effect. New Jersey challenged the constitutionality of PASPA and the case went all the way to the Supreme Court.

Before the Supreme Court issued a ruling, many predicted it would rule in favor of New Jersey and possibly strike down PASPA as unconstitutional. Kentucky and a number of other states got an early start in crafting sports betting legislation just in case – and were rewarded when the Supreme Court did indeed strike down PASPA.

Fantasy Sports Sites in Kentucky

The major fantasy sports sites operate in Kentucky due to the prevailing interpretation of Kentucky gambling law being favorable to DFS. The next step for Kentucky fantasy sites is to achieve firm legal clarity with the passage of DFS legislation.

Lawmakers attempted to do exactly that with HB 414 introduced in February of 2017. That bill made it to a full house vote and received a favorable vote of 37-36 but came up short of the 40 votes required to send that bill to the Senate.

If successful, HB 414 would have been an excellent bill for the daily fantasy industry. It sought initial licensing and annual renewal fees of just $5,000 and established a tax rate of 6%. Furthermore, if the tax bill for the year came out to more than $5,000, the initial registration or annual renewal fee could be used to offset taxes due for the year.

HB 414 and subsequent bills attached to sports betting legislation have all failed to make it through the legislative process to become law. The lack of success today seems to come down more to legal wrangling over sports betting and other provisions to which recent DFS efforts have been attached. In any case, the country’s most well-known fantasy sites operate as normal in Kentucky today.

Horse Racing Betting in Kentucky

Kentucky, home of Churchill Downs and the famed Kentucky Derby, has a long and rich horse racing tradition that runs strong to this day.

Whether it is the climate and geography that makes for naturally strong horses as some claim or a tradition born of necessity at a time when parimutuel wagering was stifled elsewhere that makes Kentucky a horse racing bastion as others claim, the fact is the Bluegrass State houses some of the best horse racing in the world.

Today, the Kentucky Horse Racing Commission (KHRC) oversees parimutuel wagering and horse racing across the state. Multiple racetracks operate throughout Kentucky and the state houses major events such as the Kentucky Derby, Kentucky Oaks, Clark Handicap and Blue Grass Stakes.

Visitors to any of the state’s licensed racetracks may place wagers in-person while everyone else can bet online through any of the several racing betting sites that are licensed to do business in Kentucky.

Off-Track Betting Locations (OTBs) in Kentucky

The last remaining OTBs in Kentucky closed in 2013 to put an end to off-track betting. However, horse racing fans may still visit mobile betting sites or any of the state’s racetracks to place wagers on races held in Kentucky and around the country.

Advance Deposit Wagering (ADW) in Kentucky

The KHRC licenses online betting sites (ADWs) such as TwinSpires and BetAmerica to offer mobile betting to customers in Kentucky. The major horse racing websites all operate in Kentucky today to offer customers online wagering from anywhere in state lines.

In 2016, the KHRC approved a new rule requiring each licensed ADW to secure a bond equal to 125% the average daily account balance of its in-state customers. This rule is intended to ensure the security of customer funds and was passed despite some concerns that out-of-state ADWs would choose to forgo Kentucky licensing but continue operating in the state.

Licensed Racetracks in Kentucky

A list of racetracks organized by type can be found at the KHRC website here. These tracks host live racing, simulcast wagering and in some cases, historical horse racing machines that operate in a manner similar to slots.

Currently, active racetracks in Kentucky include:

Thoroughbred racing, simulcasting and home to the legendary Kentucky Derby

700 Central Ave
Louisville, KY 40208

Thoroughbred racing, simulcasting and historical horse racing machines

3300 Highway 41 N
Henderson, KY 42420

Thoroughbred racing and simulcasting wagering

4201 Versailles Road
Lexington, KY 40588

Thoroughbred racing, simulcast wagering and historical horse racing machines

5629 Nashville Road
Franklin, KY 52134

Thoroughbred racing and simulcast wagering

7500 Turfway Road
Florence, KY 41042

Harness racing, simulcast wagering and historical horse racing machines

1200 Red Mile Road
Lexington, KY 40504

Online Gambling in Kentucky

Kentucky has flirted with legalizing online poker, but legal online casinos still appear to be a long way off. Bills introduced in 2019 and 2020 noted primarily for authorizing mobile sports betting also included provisions to legalize online poker for customers 18 or older and located within state lines.

Key provisions found in the 2020 online poker bill included:

  • Minimum age of 18 to play online
  • $250,000 licensing fee for operators
  • $10,000 annual renewal fee
  • 6.75% tax on poker revenue

Recent poker bills have failed to pass, but lawmakers appear intent on pushing the issue until something gets through, likely by attaching online poker to a sports betting bill.

The recent about-face regarding online poker may come as a surprise for players who remember when Kentucky seized the domains of 141 offshore poker and gambling websites. Although most states do not permit online gambling, Kentucky was a frontrunner when it came to cracking down on offshore operators.

More recently, state lawmakers are interested in legalizing, regulating and taxing online poker than in banning the activity altogether. However, pro-online poker proponents in Kentucky still face significant opposition from anti-gambling groups that lobby against legalization.

Kentucky Online Lottery

The Kentucky Lottery took its games online in April, 2016 with little fanfare in order to keep up with the times. Kentucky Lottery CEO Arch Gleason explained the rationale behind the decision in simple terms:

“Our customers are aging, and in order to maintain our business, we need to be more attractive to a younger demographic who are accustomed to conducting a majority of their retail purchases online. This group is very mobile, and they expect brands to be accessible online and on their devices. We’re delivering what they want.”

Initially, the Kentucky Online Lottery (see our review here) launched with five instant play scratch-off games and access to the most popular draw games. Over time, the website added additional games to bring the total up to more than 50 instant win games plus access to Powerball, Mega Millions, Keno, Cash Ball 225 and Lucky for Life.

State residents 18 and older with a valid KY address can play online by visiting the official Kentucky Lottery website at play.kylottery.com. From there, you can register for an account and then fund your online wallet via credit card, debit card or by visiting an authorized lottery retailer to purchase iGifts or iFunds.

Purchasing entries to draw games online is as simple as buying them in person. Once you have a funded online lottery account, you can log in from your desktop or mobile device to choose a game, choose your numbers and specify a number of entries to purchase. All ticket prices are the same online as they are at local retailers.

The Kentucky Lottery’s instant win games work similarly to scratch cards that are sold across the state. Although everything happens online, the basic mechanics are the same. You buy a ticket, “scratch” it off using your mouse or mobile device and win prizes for matching symbols. Online scratchers can be purchases for prices ranging from $0.50 to $10 and can pay as much as $150,000.

Gambling Laws in Kentucky

Kentucky’s general gaming laws are covered by KY Rev Stat § 528.010-0.120 and prohibit most forms of gambling that are not expressly authorized by the state. In Kentucky, gambling is defined as follows:

  …staking or risking something of value upon the outcome of a contest, game, gaming scheme, or gaming device which is based upon an element of chance, in accord with an agreement or understanding that someone will receive something of value in the event of a certain outcome…

Kentucky gambling law does not appear to target those who merely participate in unauthorized gambling, but the state does aggressively pursue those who organize illegal gambling games.

The crime of “promoting gambling” constitutes a chargeable offense under Kentucky law and the penalty depends on the amount of money involved.

Those who organize home poker games, act as bookmakers or otherwise profit from gambling activity can be charged for promoting gambling in the second degree, which is considered a Class A misdemeanor. If the unauthorized gambling activity takes in more than $500 in any one day, the offense is treated as a Class D felony.

State law does provide an exception for social gambling games, however, as long as all players compete on equal footing and the organizer does not earn a profit by indirect means such as charging an entry fee or selling food and drinks.