Kentucky’s Internal Battle for New Sports Betting Regulator
Republicans Want New Agency to Oversee Betting
Partisan political battles in Kentucky state government have caused lots of flip-flopping on which agency will actually serve as the regulator of sports betting in the state.
This past Friday, the Republican-controlled Kentucky state legislature overrode Democratic governor Andy Beshear’s veto of Senate Bill 299. SB 299 would create an independent Kentucky sports betting regulator called the Kentucky Horse Racing and Gaming Commission to oversee gambling.
Right now, the Kentucky Horse Racing Commission oversees gambling operations in the state and is under the control of the governor via the Kentucky Cabinet for Public Protection.
The governor’s veto would have kept the Kentucky Horse Racing Commission in control of sports betting regulation in Kentucky but SB 299, which passed both the State House and State Senate, would establish an independent corporation led by a board of directors nominated by the governor yet requiring Senate confirmation.
Picks and parlays and other gambling developments would be regulated by this corporation.
Similar to how the Kentucky Lottery Corporation operates, this new regulators corporation would oversee all of horse racing and gambling in the states. Supporters of SB 299 say this structure would still allow for control by the governor but also lead to more transparency, integrity and scrutiny.
In total, there would be 15 board members on the corporation who would oversee six distinct areas of focus — pari-mutuel wagering, live horse racing, breed development and integrity, sports betting, licensing and investigation and charitable gaming.
Why Did Beshear Veto?
Of course, Governor Beshear disagreed with this notion as he explained in a veto message to the legislature. Beshear noted that the change of structure established by SB 299 would require the new corporation to emphasize profit generation instead of actual oversight of the state’s gambling and horse racing operations.
This Kentucky sports betting regulator, he says, would have to be self-funded and self-sustaining so it would need to focus on acquiring revenue from horse racing and gambling operations just to fund itself.
SB 299 states that, starting with the 2027 fiscal year, the new corporation would no longer receive $3.7 million annually from the state’s budget-General Fund, and thus would have to increase racetrack assessments and racing industry licensee fees just to maintain its own operations.
He says that it would be difficult for the corporation to be able to regulate gambling games and other horse racing/gambling operations effectively if it constantly has to focus on making sure it has enough money in the coffers to stay operational.
Beshear also took issue with the quick enacting date of July 1, 2024 which he said was too quick a turnaround for the shifts in regulation required.
In his mind, all the changes that would result from SB 299 would require more than just a few months of adjustment time because the entire nature of how horse racing — of course a huge deal in Kentucky — and sports betting in the state would be shifted due to the new legislation and creation of the new governing body.
House Bill 281 Is Alternative
Earlier in the legislative session, Beshear signed House Bill 281 which would have created a special sports betting division within the existing Kentucky Horse Racing Commission.
This division would be the Kentucky sports betting regulator and would not have run into the same problems as the SB 299 proposed new entity because it would still be able to draw from state funding in order to operate.
The Kentucky Horse Racing Commission, as you would imagine, was created to oversee the state’s horse racing industry and has grown to also cover sports betting.
Beshear has indicated that he isn’t completely opposed to the creation of a new entity entirely to manage just sports betting in Kentucky.
However, he said that the establishment of such an entity would require long lead times to make sure that it is implemented properly and that months would be needed to draft, vet and approve such an organization.
Kentucky bettors can already take their best sport bets today under the existing framework but, in the governor’s eyes, it wouldn’t be a good idea to rush things because that could lead to complications down the road and, in the immediate future, confusion and a lack of proper oversight.
He said that SB 299 “had just days” to undergo all the proper processes that he thinks should be done over the span of a few months.
Beshear said the current legislation “endangers horse racing, sports wagering and charitable gaming” because of the way in which it was proposed and passed through both houses of the state legislature in a short period of time.
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