A Kentucky sports bill replete with several updates to the existing law has remained largely intact after getting Senate approval, but a critical element that could have forced the major sportsbooks out of the Bluegrass State was stricken in the final version.
Ultimatum Rescinded
Representative Michael Meredith’s HB 904, which includes changes to the existing sports betting laws in Kentucky, received overwhelming approval in the House before the Senate got hold of it and employed a committee substitute.
A committee substitute is a revised version of a bill created by a legislative committee; in this case, a Senate committee. It includes changes or clarifications but keeps the same bill number and overall topic as the original.
And this procedure is how the Senate struck a key element of the bill from the legislation. The amended version was then sent back to the House, where it was concurred with by a 69-19 vote. But what exactly was the controversial clause that was removed?
What Was the Controversial Clause in HB 904?
HB 904’s most polarizing issue was the mandate directed specifically at Kentucky sportsbooks that also operated prediction markets, ordering them to not only stop operating in Kentucky but also throughout the nation.
“We also say that if you are a licensee under the bill through sports wagering, a horse racing track, or a fantasy sports operator, for the next year you can’t operate a prediction market in Kentucky,” Meredith said during the House’s initial vote. “After [July 1, 2027], you’re not allowed to be involved with or in business as a prediction market operator anywhere else in the country if you’re licensed under one of our licensee structures here.”
The final version no longer forces sportsbooks to decide between their allegiance to the Kentucky sports betting market and their plans for maintaining their prediction market brands.
The less controversial aspects of the bill remained in place and are illustrated below:
- Raises betting age to 21 from 18.
- Restricts in-state collegiate athlete prop bets.
- Authorizes fixed-odds wagering on horse racing.
- Sets up fantasy sports regulations, taxing those companies at 12.5% and banning house pick’em contests.
The bill is now headed to Governor Andy Beshear’s desk for his signature, where he is expected to sign the legislation now that the ultimatum has been deleted.
Cause for Pause
There is one very compelling reason the committee substitute was utilized: money. The provision ordering all of Kentucky’s sportsbooks to shut down their prediction market brands would have likely ended with the state ultimately losing a substantial amount of money.
Although only three of Kentucky’s nine sportsbooks operate prediction market brands, their contributions to the industry have been undeniable. The powerhouse, coupled with Fanatics to a far lesser extent, generated over 83% of the $103.3 million in sportsbook taxes sent to the state since the industry launched in March 2023.
This reality likely resonated with the Senate committee, as did the joint testimony submitted by DraftKings, FanDuel, and Fanatics to the legislative bodies, which read:
“We are concerned that this legislation may have significant consequences that could materially disrupt the Commonwealth’s successful sports wagering market,” the letter reads.
“As currently drafted, section 20 would gut the regulated sports betting market and force the exit of most, if not all, existing regulated operators from the Commonwealth. This would cost the state more than $40 million in tax revenue every year – money that goes to fund teacher pensions, among others. Kentucky adults would also lose the freedom to use a popular form of entertainment on their preferred regulated sportsbook.”
