NKY legislators hedge bets for sports gambling bill

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Correction

Patrons place sports bets at Encore Boston Harbor casino Tuesday, Jan. 31, 2023, in Everett, Mass.

Steven

BY KENTON HORNBECK AND MARK PAYNE | LINK nky REPORTERS

Northern Kentucky resident and sports bettor Collin Barnes admitted he’s grown used to traveling across state lines to place his bets.

He told LINK nky there were times he drove across the Ohio River and parked his car at a gas station simply to place a bet – a common practice for Kentucky bettors. Barnes is also no stranger to ordering round-trip Ubers, a strategy he’s deployed many times to get to legal betting territory.

“I could not add up the amount of time I’ve spent driving in a car to go over state borders to bet,” he said.

Kentuckians have proven they are willing to travel across state borders to place sports bets, and other states have benefitted from Kentuckians spending their money in bordering states.

Rep. Michael Meredith (R-Oakland), the sponsor of House Bill 551 — the sports betting bill moving through the legislature in 2023 — said the American Gaming Association estimates there’s $1 billion illegally wagered in betting in Kentucky each year.

A fiscal note on House Bill 551 states that legal sports betting would bring in roughly $23 million to the state each year.

Over 180,000 accounts created by Kentucky residents accessed sportsbooks in legal states last football season, according to data compiled by GeoComply, a geographic location detection software sports betting apps use to detect VPN fraud. The data was measured from the start of the last NFL season from September 2022 to February 2023.

A VPN is a virtual private network, which allows users to establish a protected network connection when using public networks.

Not only does GeoComply track betting data, it’s also software that prevents bettors in illegal states from placing bets. For example, if a bettor was standing in Newport and went to place a bet on DraftKings Sportsbook, they’d get a notification that their device’s location indicates that they are not permitted to bet in their area. The bettor would have to walk across the Purple People Bridge into Cincinnati in order to place a legal bet.

“I don’t see where not allowing legal betting in the state is benefiting really anyone,” Barnes said.

Until recently, the possibility of legal sports betting in Kentucky was up in the air when former Rep. Adam Koenig (R-Erlanger) lost his bid for reelection in 2022.

Last year, Koenig sponsored legislation that the House approved, but it was ultimately shot down in the Senate. That session, one of the roadblocks was Committee Chairman John Schickel (R-Union), who wouldn’t hear the sports betting bill Koenig sponsored.

On Feb. 22, Meredith introduced HB551, legislation that would legalize sports betting in the Bluegrass State. The new sports betting bill cleared the Senate Licensing and Occupations committee March 15 — marking a significant moment for legislation that died in the Senate last session.

This is the fourth time sports betting-related legislation has made its way through the statehouse.

The Licensing and Occupations committee, which Schickel chaired, was where the bill was first assigned during the last legislative session. It seemed unlikely that Schickel was going to support the bill. But he has been a staunch supporter of the racing industry in Northern Kentucky.

He explained in a statement that while he was the primary sponsor of historical horse racing several years ago, he finds thoroughbred racing to be more than a sport.

“It’s a pastime and an art form,” Schickel said.

After the bill seemed unlikely to pass in the committee last year, it was moved to the Senate Economic Development Committee. Another Northern Kentuckian and former legislator, Sen. Wil Schroder (R-Wilder), also chaired this committee.

Ahead of Wednesday’s meeting, Schickel said he didn’t know if he would consider the bill this year. He provided the lone no vote and said in a statement that his vote isn’t based on morality.

“Hyper-gambling would not improve society and allowing sports betting — especially on our collegiate sports and to a lesser degree professional sports — concerns me,” Schickel said, further drawing attention to gambling on cell phones, which could affect young people.

The legislation’s detractors have argued from different angles, including questioning if the industry could coexist in a state where horse betting is king, and questioning whether or not legalizing sports betting is a moral good.

Barnes said he thinks the horse racing industry and sports betting industry can coexist in Kentucky.

Meanwhile, David Walls, executive director for the Family Foundation — a Christian organization that lobbies the legislature to follow “biblical values” — testified to the Senate committee that this bill is a form of “financial fraud” that sees the government partner with gambling companies.

“Predatory gambling, especially in the expansive form that’s being considered in House Bill 551, is not a victimless form of entertainment for competition,” Walls said.

He questioned whether the expansion of gambling is good policy during a time of high inflation and high gas prices. He also added that the legislature passed a bill banning slot-style “gray machines” in gas stations and bars.

“After just voting to ban gray machines because of very legitimate concerns about every gas station being turned into a mini-casino, I certainly hope this honorable body will not have to turn around and turn every iPhone into a digital casino that kids will have access to,” Walls said.

Senate Majority Floor Leader Damon Thayer said the legislature couldn’t stop people from doing bad things for themselves.

In his testimony, Thayer reiterated that this bill is something the public wants, and six of seven Kentucky border states already have sports betting in place.

“You can stand in Covington, Kentucky, and look across the Ohio River and see a brickand-mortar sports book location,” Thayer said. “The public wants this.” When presenting the bill to the Senate Licensing and Occupations Committee this session, Meredith said that a 2022 poll showed 65% of Kentuckians support sports betting.

“This is about regulating a marketplace that already exists,” Meredith said.

“We noticed a significant amount of mar- ketplace just going across the state line — across the river — to place their wages,” Meredith said.

Meredith said on the House floor that this bill would allow the Commonwealth to take advantage of funds already spent on gambling that occurs illegally in the state — he mentioned that Kentuckians pull up gambling websites they think are legal because they can access them via their phone or computer.

Ohio legalized sports betting on Jan. 1, 2023. During the first month, bettors in Ohio spent $1.1 billion, according to a report from the Columbus Dispatch. About

$208 million in revenue was generated for sportsbooks in the state.

In the public sector, Ohio implemented a 10% tax on sports betting revenue, which generated over $20 million in tax revenue for the state.

“The amount of tax money – I feel almost bad leaving the state to go bet,” Barnes said. “There’s no telling the amount of people that cross. Kentucky is just missing out on that money.”

Some Kentucky lawmakers like Meredith agree with Barnes’ assessment. In the bill, there’s a 9.75% proposed tax on in-person bets and 14.25% on mobile and online bets, which were included in last year’s sports betting legislation.

The new bill also clarifies the Horse Racing Commission’s Regulatory Authority and Structure. This allows the tracks to be the main licensees and to contract with three sports wagering companies. In previous bills the tracks could only contract with one company.

An amended version presented earlier this month slightly changed from its original version, with users no longer needing to register their account in person.

Tax rates will also be the same — 9.75% on in-person bets and 14.25% on mobile and online bets, which were included in last year’s House Bill 606.

An amendment introduced on the House floor would send 2.5% of the taxes collected to a problem gambling fund.

“All the promotional stuff is already out there,” Barnes said. “Anyone that’s not already betting is already seeing all the promotional content and stuff for it from commercials.”

The mainstream adoption of sports betting is a relatively new phenomenon. Prior to 2018, Nevada was the only state in the union to house legal sportsbooks. Traveling to Las Vegas was a pilgrimage for bettors.

That changed in 2018 when the Supreme Court repealed the Professional and Amateur Sports Protection Act of 1992, or PAPSA.

The law defined the legal status of sports betting in the United States, effectively rendering sports betting illegal across the country. Once it was overturned, a bevy of states raced to pass laws that legalized and regulated the industry in their state.

Delaware was the first. Since then, 36 states and Washington D.C. have allowed sports betting legislation within their borders. Kentucky is bordered by seven states, six of which have legalized sports betting online and in retail locations. Missouri is current- ly the only state bordering Kentucky to not have legalized sports betting.

Sports betting has been embraced by professional sports leagues like the NFL and MLB.

The activity ingrained itself into the fabric of sports culture, much to the chagrin of the Christian community and some outspoken professional athletes.

“Gambling and sports betting has completely taken the purity and the fun away from the game,” said NBA star Kyrie Irving said while livestreaming on Twitch.

Walls argued to the state Senate that the legislation will lead young viewers to believe that “gambling is central to playing and watching sports.”

“Studies have indicated that children, no matter what steps are taken, they will gain access to sports gambling apps on their phones and devices in states where sports betting is legal,” he said.

As a bettor, Barnes said he doesn’t necessarily disagree with someone who shares Walls’ perspective, but acknowledges that at this point, with the amount of bets in other states, Kentucky is risking losing out on a source of vital revenue that could be good for both the public and private sectors.

“I understand people not being okay with gambling,” Barnes said. “They don’t think it’s right. They don’t think it should be legal. That’s fine, you can believe that. But the money is going out, the money is being placed. People in Kentucky are betting and at this point, you’re just missing out.”