The application process for Kentucky sports betting licensing began Tuesday, and while two sportsbooks have already partnered up with horse racing tracks, state officials say 10 to 12 operators are likely to eventually launch out of a potential field of 27.
It is up to the Kentucky Horse Racing Commission to decide which sports betting applications it will accept, with licensing up next. Gaming Today has reached out to the KHRC for numbers on how many applications have been filed, with a response pending.
It is uncertain if Caesars Sportsbook Kentucky (partnered with Lexington’s Keeneland and Red Mile race tracks) and FanDuel Kentucky (partnered with Churchill Downs in Louisville), or other sportsbooks, have yet to start the application process.
If not, it shouldn’t be long before they do.
The application rules appear to fast-track temporary licensing under emergency sports betting rules that took effect Monday. It’s a system designed to meet a timeline for a Kentucky sports betting retail launch on Sept. 7 followed by a mobile launch on Sept. 28.
The Path to Temporary Sportsbook Licensing in Kentucky
The nine Kentucky horse racetracks eligible to hold sports betting licenses under the state’s 2023 sports betting law are not required to partner with service providers, although most — if not all — are expected to do so. Up to three sports betting operators are authorized per track by law, meaning there may be as many as 27 mobile apps (“skins” in industry parlance) available in the state.
According to the emergency rules, the KHRC “shall grant a service provider application if the commission determines that the applicant’s participation as a sports wagering service provider is in the best interests of sports wagering in Kentucky.” Along with that application comes a nonrefundable fee of $50,000.
Gaming regulators may then grant a temporary license to a sportsbook after an applicant submits an initial application.
Between the application and potential license comes a review of the application by the KHRC. Under that review, the commission will consider at least the following factors:
- Whether the applicant will operate as, or in agreement with, a licensed Kentucky horse racing association, per Kentucky law
- Whether an applicant’s owner(s) and “key persons” qualify for occupational licenses under regulation
- Whether the applicant is at least 18 years old (which is also the minimum age to bet on sports and horse racing under Kentucky law)
- Whether the applicant demonstrates “a level of skill, experience, knowledge, and ability necessary to operate as a service provider as required” by regulation
- Any convictions or charges related to violations of gaming law faced by the applicant
- Whether an applicant appears on any jurisdiction’s exclusion list for gaming violations
The KHRC will also consider whether an applicant “has at least one contract to provide services … to a sports wagering operator” in its decision. Caesars and FanDuel have announced partnerships with a total of three of the nine tracks eligible to hold sports wagering licenses in the Bluegrass State.
Tracks Must Be Licensed First
Partnership or not, tracks must hold a sports wagering license before they can legally take sports bets under Kentucky law.
Any of the nine tracks that want to offer sports betting under temporary licensing are required under the state’s law to pay an initial licensing fee of $500,000, renewable for an annual fee of $50,000 by law. They must also meet stringent technical requirements.
National testing of gaming servers and equipment, geofencing (to ensure bets are made in Kentucky), and demonstrated compliance with rules governing age verification and account registration all fall under the licensing process. Retail operations must have approved floor plans, testing of sports betting kiosks, and meet other requirements as well.
According to an impact statement attached to the emergency regulations, the KHRC estimates that it will cost approximately $2.4 million to implement sports betting in the first year.
Kentucky is expected to net at least $23 million a year in tax revenue from sports betting statewide.
photo by: Thomas Kelley
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