Kentucky Gov. Andy Beshear wants the state’s sports betting industry to launch before the start of the NFL season.
That doesn’t leave regulators a lot of time to structure rules for the Kentucky sports betting industry. The Kentucky Horse Racing Commission, the regulatory body in charge of sports betting, scheduled a special meeting this Monday to review a set of sports betting rules.
There’s less than two months between Monday’s meeting and the kickoff of the 2023 NFL season. That’s an incredibly short timeframe for the KHRC to finalize the regulatory landscape and license operators. Additionally, operators need a little bit of runway to launch their Kentucky sports betting platforms.
However, Jeff Ifrah, one of the world’s foremost authorities in gaming law and a founding member of Ifrah Law, told PlayKentucky there is one way regulators could skirt this timeline.
Kentucky Could Adopt Temporary Sports Betting Regulations
The current timeline between now and Beshear’s desired launch date makes it a near-impossible task for regulators. But Ifrah says the KHRC could allow operators licensed in other states to launch in Kentucky.
Otherwise, there’s very little chance Kentuckians are betting on NFL games this year.
“I don’t think that the approach would be to actually go through an intensive licensing application process,” Ifrah told PlayKentucky. “Because that would not work. However, they could do something like agree to exercise, at least maybe on a temporary basis, some level of reciprocity to operators who are already licensed in other states. They could recognize those licenses on a temporary basis, and that could create a pathway for them to go live in time for this year’s NFL season.”
For example, the KHRC could allow an operator licensed in New Jersey to operate in Kentucky. In the meantime, they undertake their own licensing process.
New Jersey is generally considered the gold standard of online sports betting. Nevada’s gaming industry is also considered by many to be well-regulated. Thus, if Kentucky chose this route, it would make sense to pick a state that would already have well-vetted operators.
The KHRC could also force operators to be licensed in multiple states for temporary market access in the Bluegrass State. It would be similar to the California online sports betting ballot initiative. It stated operators could only launch if they were licensed in 10 other states.
Kentucky Risks Becoming Anti-competitive With This Route
This does seem like a good fix for Kentucky if an NFL launch is in the cards. On the other hand, Kentucky risks shutting out some smaller operators in exchange for expedient regulation.
“At what point does it also become anti-competitive?” Ifrah asked. “If we’re going to have 11 licenses go to market, can we really require them to be in five states? Six states? All of those questions, I believe, are being debated right now.”
The move would put some smaller operations at a disadvantage. Tipico, for example, has an unusually high brand awareness in Kentucky, setting it up for marginal success if it does decide to pursue a Kentucky license.
But it is only licensed in New Jersey, Iowa, Ohio, and Colorado. Depending on which state Kentucky chooses for a license requirement, it could keep Tipico from having a Kentucky platform — at least at first.
This isn’t a normal route for states to take. But it has been discussed before at both state and federal levels.
“West Virginia, to a certain degree, when it first launched its program, discussed relying on New Jersey licenses,” Ifrah told PlayKentucky. “Or at least creating some flexibility when an applicant also held a New Jersey license. I think there was a federal bill years ago that basically was going to only have licenses out of Nevada and New Jersey countrywide.”
Are Partnerships Expected to Be Finalized Soon?
There are only two operators confirmed to apply for an online sports betting license in Kentucky. Per the legislation, online companies must partner with one of the 10 venues eligible to operate a retail sportsbook.
Those venues can partner with up to three online sportsbooks, meaning there can be up to 30 online sportsbooks.
Caesars Sportsbook partnered with Keeneland and Red Mile and FanDuel Sportsbook made a deal with Churchill Downs.
But aside from those two deals, it’s been incredibly quiet on the partnership front. Ifrah says that’s because these deals don’t increase stock prices like they used to.
“It’s not like the old days where someone wanted to announce a partnership because they wanted to tell their shareholders that they’re going to be in a particular state,” Ifrah said. “I think at this point, most of the operators assume they’re going to be in Kentucky. We used to hear, ‘I secured Pennsylvania,’ or, ‘I secured New Jersey.’ But I don’t really think that’s relevant anymore.”
There may not be a need for the publicity. But these partnerships will need to be finalized soon if they want to get up and running by launch.
About the Author
