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The recent legalization of sports betting in Kentucky has sparked political debate and questions about the timeline for launching the industry in the state. Governor Andy Beshear and Senate Majority Leader Damon Thayer have suggested a fall launch. At the same time, Republican gubernatorial candidate Alan Keck has proposed redirecting revenue from the new law to school security rather than the state's pension system.
However, the Kentucky Horse Racing Commission (KHRC) is now on the clock to develop regulations, scope out potential operators, and license facilities and operators within just over two months from the new law's effective date.
The timeline is aggressive but not unprecedented, as Iowa took three months to launch after the Professional and Amateur Sports Protection Act was overturned in 2018. Kentucky's new law is not effective until late June, which means the KHRC cannot officially begin work on legal sports betting until that time. However, other states that have legalized in the past have had an effective date rather than a legal one. This allowed regulators in those other states to begin developing rules ahead of the effective date.
Since Kentucky has an effective date so that should help move things forward faster. Kentucky's KHRC has stated that it is dedicated to fulfilling its responsibilities promptly while ensuring a successful implementation of sports wagering in the state. The launch should happen before the Super Bowl on February 11, 2024, if the KHRC uses the entire six months to get to the launch.
All legal sports betting in Kentucky will be tied to the state's nine-horse race tracks. The state is not home to professional sports teams, but it has a NASCAR track and a PGA Tour stop. It also hosts the Kentucky Derby and has the University of Kentucky as a frequent March Madness competitor.
The new law allows for an open, competitive market with no restrictions on college wagering, a legal age of 18, no requirement for using official league data, and a tax rate of 14.25%. Each track will pay $500,000 for an initial license and $50,000 per year renewal, while operators will pay a $50,000 application fee and $10,000 per year renewal. The law allows each track to have one retail sportsbook and three digital partners, which could result in up to 27 mobile platforms in the state.
The legalization of sports betting in Kentucky offers an opportunity for revenue growth and an open, competitive market for bettors. While the timeline for launch is ambitious, the KHRC has expressed its dedication to fulfilling its responsibilities in a timely manner. The industry's success in Kentucky will depend on the KHRC's ability to develop effective regulations, vet potential operators, and license facilities and operators within the allotted time frame.
With all this said, a launch is possible by the start of the NFL season but no later than the end of the NFL season. While some states have been very quick and others have taken seemingly forever, in my expert opinion, Kentucky should be well suited to launch quickly on the regulatory side.
With horse racing already legal in the state and the entire sports betting industry directly tied to it under the legislation, these are not brand-new regulators. That experience and having the regulatory body of the KHRC already set up should lead to a quicker launch.
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