Lex Vegas: A New Frontier of Sports Betting in Kentucky

Blog Post | 110 KY. L. J. ONLINE | November 29, 2021

Lex Vegas: A New Frontier of Sports Betting in Kentucky

By: Robert Dean, Staff Editor, Vol. 110

As the great Corey Smith once said, “times are a changing, and I’m still the same.”[1] This is the position held by the Kentucky Legislature in regard to allowing gambling to function within the state.

On May 14, 2018, the United States Supreme Court reversed a Third Circuit decision upholding the Professional and Amateur Sports Protection Act (PASPA), which was a federal ban on states enacting their own sports gambling regulatory regimes, holding the federal law to be unconstitutional.[2] Although this decision allowed states to legalize sports gambling operators to function within the state, some states, including Kentucky, have not embraced this freedom.[3] As of September 2021, Kentucky is surrounded by states that either allow sports gambling within their borders or have more relaxed general gambling laws, for instance, Tennessee.[4]

As Tennessee’s first full year of legalized sports betting is coming to an end, sportsbooks within the state have accumulated approximately $205 million in revenue as of November 17, 2021. In addition, Tennessee has collected $35 million in taxes on this revenue.[5] Another state that is seeing the benefits of this legalization is Indiana, who legalized sports betting in 2019[6]. Since legalization, Indiana has realized over $39 million in taxes.[7] There is no doubt that some of this revenue is coming from Kentucky citizens making the trip across the border in order to gamble.

Kentucky’s unique infrastructure is set up to efficiently accommodate a new law allowing sports gambling. As a result of the prominence of Kentucky’s horse racing industry, there are tracks scattered across Kentucky that have the unique ability to incorporate sports gambling operations. Some of these tracks, including Redmile, Churchill Downs, Turfway, Ellis Park, and Kentucky Downs are currently or have already made renovations and expansions to their facilities.[8] One could speculate that these improvements are being made with the hope that there will be a relaxation of gambling laws and with the intention of housing gambling operations when that time comes.

It is only a matter of time before Kentucky’s government passes or amends a law that will allow sports betting within the borders of Kentucky. Matt Jones, owner and founder of Kentucky Sports Radio, believes that the question is not whether or not Kentucky will legalize sports betting, but rather when it will legalize sports betting.[9] He articulates, “[t]he question is do we want to be the 41st or do we want to be the 14th and get the head start.”[10] Andy Beshear has already said that it is time to pass sports betting, asserting that the prohibition “unduly restricts us [Kentucky] from innovation.”[11]

Currently, there are two House Bills that have been introduced in the Kentucky House of Representatives, both sponsored by Representative Al Gentry, D-Louisville.[12] These Bills would “require the racing commission to institute a system of sports wagering at tracks and other specified locations . . . .” and “amend KRS 230.215 to declare the intent to allow citizens to enjoy sports wagering and allow the racing commission to institute a system of sports wagering at tracks . . . .”[13]

Optimism and the hopefulness of passing a bill on sports gambling in 2022 is tainted when confronted with the fact that the 2022 General Assembly session will be the fourth time in a row a sponsored sports betting bill has been introduced.[14] The future of Kentucky’s economy is unclear, but one cannot argue against the point that there is a unique synergy in the combination of Kentucky’s race tracks, its’ large college sports fan base, and gambling operations.

[1] Corey Smith, The Broken Road (Undertone Records 2011).

[2] Murphy v. NCAA, 138 S. Ct. 1461, 1484–85 (2018).

[3] Bob Babbage & Julie Babbage, Public Policy: Wanna Make a Bet?, The Lane Rep. (Sept. 13, 2021), https://www.lanereport.com/146426/2021/09/public-policy-wanna-make-a-bet/.

[4] Id.

[5] US SPORTS BETTING REVENUE AND HANDLE, Legal Sports Rep. (Nov. 17, 2021) [hereinafter US Sports], https://www.legalsportsreport.com/sports-betting/revenue/.

[6] Andrew Clark, Sports betting is legal in Indiana. Here’s everything you need to know about it, IndyStar (Aug. 31, 2019, 1:23 PM), https://www.indystar.com/story/news/local/2019/08/31/indiana-sports-betting-gambling-casinos-gaming/2166381001/.

[7] US Sports, supra note 4.

[8] John Schickel, Ky. Horse Industry Comes Roaring Back, The River City News (May 06, 2021), https://www.rcnky.com/articles/2021/05/06/op-ed-ky-horse-industry-comes-roaring-back; Darren Rogers, Churchill Downs Announces Multi-Year Projects to Transform the Legendary Racetrack, Churchill Downs (July 28, 2021), https://www.churchilldowns.com/racing-wagering/news/churchill-downs-announces-multi-year-projects-to-transform-the-legendary-racetrack; Tom Ferry, THE RED MILE, All About the Race, http://allabouttherace.com/red-mile.

[9] Matt Jones, One on One: The Business of Sports in Kentucky, The Lane Rep. (Apr. 07, 2021), https://www.lanereport.com/140181/2021/04/one-on-one-the-business-of-sports-in-kentucky/.

[10] Id.

[11] Jack Brammer, Beshear tells lawmakers to be ‘bold’ and pass betting bills, medical marijuana, Lexington Herald Leader (Dec. 16, 2020, 3:55 PM), https://www.kentucky.com/news/politics-government/article247891975.html.

[12] H.R. 534, 2021 Gen. Assemb., Reg. Sess. (Ky. 2021); H.R. 531, 2021 Gen. Assemb., Reg. Sess. (Ky. 2021).

[13] Id.

[14] Babbage & Babbage, supra note 2.