Kentucky Must Pony Up to the 21st Century: The Path Towards Sports Betting in the Bluegrass State is Worth the Gamble

Blog Post | 109 KY. L. J. ONLINE | Oct. 25, 2020

Kentucky Must Pony Up to the 21st Century: The Path Towards Sports Betting in the Bluegrass State is Worth the Gamble

By: Michael Simon

In 2018, the U.S. Supreme Court in Murphy v. National Collegiate Athletic Association struck down the Professional and Amateur Sports Protection Act (PASPA) in violation of the anti-commandeering doctrine.[1] PASPA created a blanket prohibition on sanctioned sports wagering.[2] The Court held that “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”[3] Congress has chosen to remain silent thus far, leaving the states with the ability to regulate sports gambling on an individual basis, an opportunity Kentucky should raise the stakes and take.

Kentucky has not yet legalized sports gambling. In early 2020, there was a bill with the support of Governor Beshear and Senate Majority Leader Damon Thayer, with Representative Adam Koenig reporting that he had the votes to pass it.[4] The bill would legalize sports betting, online poker, and daily fantasy sports in the Commonwealth.[5] What seemed like an opportunity to join Kentucky’s border states and raise revenue through activities already enjoyed by Kentuckians was halted by the Republican caucus.[6] The Senate chose not to call the bill to a vote without the support of the caucus.[7]

Each one of Kentucky’s neighboring states, apart from Missouri, has either legalized sports betting or a bill has been passed with implementation occurring soon.[8] Tennessee is one of the most recent states to legalize sports betting, passing a bill in May of 2019.[9] The Volunteer State will have exclusively online wagering as it does not have casinos or racetracks.[10] Multiple firms have already completed applications to serve as sports gaming operations, with licensing for each costing $750,000 a year.[11]

Illinois, another neighbor to the Commonwealth, has already seen its legalization of sports gambling bear fruit. The first bet was placed in March of this year, and through July bettors had wagered almost $62 million on sports.[12] This was all in the midst of a pandemic, while sports were mostly at a stoppage. Illinois taxes sportsbook revenue at 15 percent, creating an immense benefit to the state. For a look at when sports take a more active role, Indiana is a prime example. In September of this year, when the NFL and college football began, Hoosier State wagerers generated a betting handle of $207.5 million.[13] From August 2019 to August 2020, there has been over $1 billion wagered in Indiana.[14] This has resulted in $8 million in state gaming taxes being generated, despite the complexities of COVID-19.[15]

The paradox of Kentucky seems to make it a ripe state for passage of sports betting. Every year on the first Saturday in May, Kentuckians and horse enthusiasts from around the world flock to the prided Churchill Downs and place their bets on a four-legged chance. Beyond the steeples of the track, those same Kentuckians face restrictions when it comes to sports betting. The message is clear: if you want to partake in sports betting, take your business to a neighboring state.[16] There are many options that are a short drive away and Kentuckians can invest in the economy of betting friendly states. The legislature of West Virginia has recently identified the same need for legalization that Kentucky is experiencing. In order to keep West Virginia’s citizens safe, create jobs, and make revenue, the legislature determined it is best to establish a secure, responsible, fair and legal system of sports wagering.[17] Doing so will also “promote, and enhance the tourism industry of the state, as well as the general fiscal wellbeing of the state and its subdivisions.”[18]

In the abstract, other states with successful betting systems in place make a strong case for the positive impact it could have in Kentucky. However, there is concrete evidence that Kentucky can and will support a betting landscape. Betting on horses and betting on sports come with similar risks and rewards, and horses provide a strong example of the potential to Kentucky. Over 80,000 jobs are created by the horse industry, keeping Kentuckians employed and participating in the economy.[19] In 2019, $165 million was wagered at the Kentucky Derby alone.[20] Kentucky betting is fragmented to solely support the horse industry, however, taking the success of that and applying it to the potential growth we could see from sports, makes it a safe bet.

Currently, states have the power to put more life in their economy through sports betting. Kentucky’s neighbors have chosen to do so and are experiencing financial rewards, despite the desperate economic context created by a pandemic. Kentuckians can travel to these other states to do so, or we can keep Kentucky dollars in Kentucky and choose to pass a sports betting bill. The horse industry, while unique, demonstrates that Kentucky has the environment to support betting and the citizens willing to partake in it. Choosing to allow betting in one context and prohibit it in another makes little economic sense. It is in the best interest of Kentuckians and Kentucky’s economy to legalize sports betting. It is time for Kentucky to get in the game.

Citation

[1] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1481 (2018).

[2] Id. at 1473.

[3] Id. at 1484.

[4] Matthew Kredell, How Kentucky Sports Betting Bill Failed in 2020 Despite Having the Votes, Legal Sports Rep. (Mar. 26, 2020), https://www.legalsportsreport.com/39481/kentucky-sports-betting-bill-dead/.

[5] Id.

[6] Id.

[7] Id.

[8] Kendall Baker, The States That Have Legalized Sports Betting, Axios (Aug. 7, 2020), https://www.axios.com/sports-betting-legalized-what-states-4a26bb27-d88f-4adf-a908-6e10441ed855.html. 

[9] Pete Blackburn, Tennessee Will Allow Sports Betting No Later Than Nov. 1, Per Report, CBS Sports (Aug. 18, 2020, 6:08 PM), https://www.cbssports.com/general/news/tennessee-will-allow-sports-betting-no-later-than-nov-1-per-report/.

[10] Id.

[11] Id.

[12] Mitchell Armentrout, Illinois Racks Up Nearly $62M Sports Handle Since Pandemic-spoiled Launch – And 90% is Linked to State’s Top Grossing Casino, Chi. Sun Times (Sep. 16, 2020), https://chicago.suntimes.com/politics/2020/9/16/21440002/illinois-sports-betting-first-handle-sportsbook-gambling-pritzker.

[13] Peter Amsel, U.S. Sports Betting States Set September Records, CalvinAyre.com (Oct. 9, 2020), https://calvinayre.com/2020/10/09/business/us-sports-betting-states-record-setting-september/.

[14] Evan Davis, You Can Place a Sports Bet in Indiana. Why Won’t Kentucky Get in the Game?,  Louisville Courier J. (Aug. 27, 2020, 6:23 AM), https://www.courier-journal.com/story/opinion/2020/08/27/sports-betting-kentucky-state-should-legalize-sportsbooks/3421095001/.

[15] Id.

[16] Id.

[17] S.B. 415, 84th Leg. (W.V. 2018). 

[18] Id.

[19] Kathie Stamps, CKY Market Review: An Economic Force and a Way of Life, Lane Rep. (Oct. 10, 2019), https://www.lanereport.com/117888/2019/10/cky-market-review-an-economic-force-and-a-way-of-life/.

[20] Jack Jones, How Much is Bet on the Kentucky Derby, BetFirm (June 3, 2019), https://www.betfirm.com/how-much-is-bet-on-the-kentucky-derby/.