It’s almost post time for the 2021 Kentucky Derby — that one event when more than 150,000 people typically fill Louisville’s Churchill Downs to sip mint juleps and place horse bets.
A smaller crowd of around 45,000 will be in attendance for the iconic race this Saturday under the racetrack’s COVID-19 protocol, but horse race betting on-site will still reach into tens of millions of dollars at a minimum.
The amount wagered on sports at the Downs this weekend? Zero.
The reason is simple — sports wagering isn’t legal in Kentucky. Not that Kentucky State Representative Adam Koenig hasn’t tried to bring sports betting under Kentucky law. The Northern Kentucky Republican and chairman of the House Licensing, Occupations, and Administrative Regulations Committee has filed bills to legalize sports wagering in the Bluegrass State for three years, with limited success.
Koenig told Gaming Today in a phone interview on his way to the Kentucky Oaks at Churchill Downs this morning that his 2021 sports wagering bill was shelved to save the state’s more lucrative historical horse racing (HHR) industry. The Erlanger lawmaker didn’t argue with the decision to put HHR above sports wagering in the 2021 Regular Session, but the demise of his 2020 sports betting bill was a different story.
Had sports betting been legalized in Kentucky last year, Kentucky Derby fans could be betting on sports at Churchill Downs, Keeneland Race Course in Lexington, and other tracks in Kentucky this weekend, said Koenig. They could also place sports bets on their phones, anywhere in the state, through a Kentucky Horse Racing Commission-approved app.
An estimated $22.5 million in new state revenue could be flowing into Kentucky from sports wagering alone under the 2020 bill, which would have also legalized online poker and fantasy sports betting in the Commonwealth.
Kentucky’s Brief Sports Betting History
2020 appeared to be Koenig’s best chance yet to bring retail and mobile sports betting to the state through Kentucky’s horse race tracks and its one qualified pro sports venue — the Kentucky Speedway professional motorsports track in Sparta.
The 2020 bill was approved unanimously by Koenig’s committee, had bipartisan support in the House, support from most tracks, and support from Gov. Andy Beshear. Where it fell short was in votes from Koenig’s own party.
Long story short — the bill was never called for a vote on the House floor. It was instead recommitted to committee, where it died.
Koenig said one reason that legal sports betting is so elusive in Kentucky is the state’s rural-urban divide. Large urban areas in Kentucky support sports wagering, rural areas typically do not.
“It is both a rural-urban issue, and an R&D issue,” he explained. “The Democrats are overwhelmingly for it. In the Republican party, it’s more of a rural-urban issue. These rural legislators, many of them don’t feel comfortable supporting it. Most, if not all, of the urban Republicans are very supportive.”
How Kentucky Could Benefit From Sports Betting
The benefit of sports betting to Kentucky is not only a tax issue. It’s also an economic development issue, as Koenig mentioned. Five of the seven states that border Kentucky – with the exception of Ohio and Missouri – have legal sports betting.
That means Kentucky is losing money to sports betting states with each passing year.
“There are plenty of people who tweet at me every weekend pictures of them driving across the bridge to Jeffersonville, IN, or Evansville, IN, to make their bets and then drive back home,” said Koenig. “It’s certainly revenue that we are losing here in this state.”
The impact on state revenues is also very real. Koenig said actual money lost by the Commonwealth of Kentucky due to illegal sports wagering is “conservatively” $25 million annually.
“That’s money not being collected by the state that could go to, as we lay out in the bill, addiction prevention services as well as helping to fund our pension system — which is approximately $40 billion to $60 billion in the hole,” he said.
Koenig has no plans to stop pushing for legal sports betting in Kentucky. He says he will be back in Frankfort next January with a proposal that will hopefully pass legislative muster.
“I have a new optimism in that, you know, we passed HHR this year, and there are rural members who voted for (the HHR bill) who realize that it was not the death knell to their political careers,” said Koenig. “When they went home, they had plenty of people thank them for it.”
As far as bridging a move toward sports betting in Kentucky with fixed-odds horse betting, Koenig said he still favors sports betting overall.
“I think sports betting is much more likely to go,” he said. “I’m for the fixed odds as well, but that’s a complicated issue. Everyone understands sports wagering, they know it happens regularly. So I think that’s a much easier sell.”
Is there a chance that Gov. Beshear could call a special session on sports betting? Possibly. But Koenig doesn’t know the odds.
“If so, no one’s talked to me about it,” he replied.