FRANKFORT, Ky. (AP) — Kentucky took the first step to legalizing sports betting on Wednesday as a legislative committee strongly endorsed a bill that one estimate says would bring in at least $20 million a year in new taxes.
Kentucky seems to be in a race with its neighbors to make sports betting legal following a U.S. Supreme Court decision last year that struck down a federal law that had banned the industry in much of the country. West Virginia has already legalized sports betting, and state officials in Tennessee, Ohio and Illinois are considering it.
If they are going to do it, Kentucky lawmakers have an economic incentive to do it quickly. An analysis by the firm Commonwealth Economics found the state could generate as much as $48 million a year in taxes if Kentucky legalizes sports betting while most of its neighbors do not. But if all the other states have sports betting, Kentucky's revenue projections drop to $20 million a year.
The proposal approved Wednesday by the Kentucky House Licensing, Occupations and Administrative Regulations Committee would spend some of that new money on regulating the new industry and setting up a program to help people with gambling addiction problems. But most of the money would be go to the state's public pension systems, which are estimated to be at least $39 billion short of the money needed to pay benefits over the next three decades.
Wednesday, the Republican-dominated committee approved the bill without a single "no" vote, while Democratic Rep. Dennis Keene voted "pass." But the bill will need significant support to make it out of the state legislature before it adjourns for the year on March 29. Last year, state lawmakers approved a two-year spending plan that does not expire until June 30, 2020. Because the new bill would raise and spend money, it would require at least 60 votes from the 100-seat House of Representatives to pass.
"I don't know yet, to be honest," Republican state Rep. Adam Koenig said when asked if the House had enough votes to pass the bill.
Republicans control 61 of the 100 seats. But the caucus is divided on the issue, with some lawmakers morally opposed to gambling of any kind.
"I think there are a lot of Republicans who are against it," said Republican Rep. Chris Fugate, who is a pastor. "I hope it fails."
The Family Foundation, a conservative advocacy group, has argued the bill would violate the state Constitution. Executive Director Kent Ostrander noted in an interview that all of that money for the gambling industry and state coffers would come from Kentucky families because businesses, corporations and nonprofits can't gamble.
"The state should cause families to thrive, not prey on them for revenue," Ostrander said.
House bill 175 would make it legal for people in Kentucky to bet on sports, but they would have to do it in person at one of the state's horse racing tracks or the Kentucky Speedway, which hosts a NASCAR race each year. People could place wagers on their phones, but they would have to travel to one of the tracks in person to download the app. Koenig said the app would monitor locations to make sure people don't place bets outside of the state lines.
People in Kentucky could bet on college sports, but they could not wager on games that include teams from Kentucky schools. That would include the beloved basketball teams at the University of Kentucky and University of Louisville.
The proposal would require bookmakers to pay a 9.75 percent tax on its revenue, which does not include money paid to people who win. The tax rate would be 14.25 percent for wagers made online. The proposal would also legalize fantasy sports gambling and internet poker.
"My biggest issues are we're not going far enough on expanded gaming," Democratic state Rep. Al Gentry said.
