• Kentucky is $39 billion short for paying pensions over the next 30 years.
  • The state could generate $48 million a year from legalizing sports betting.
  • The bill to permit sports betting was approved in Committee this month.

Kentucky legislators unanimously approved House Bill 175 in the Licensing and Administrative Regulations Committee earlier this month with the mindset that legal sports betting would help fund the state’s struggling pension and benefits program.

Just how bad is it struggling? According to Republican KY Governor Matt Bevin, it is “the worst funded [program] in the nation” as the state does not have any extra savings set aside for it. At this rate, the unfunded liability could be as high as $84 billion and the state is considered to be at least $39 billion short of the money needed over the course of the next 30 years.

In November of last year, the Attorney General of Kentucky, Andy Beshear, requested that legislators enact a measure that would remedy this situation in the form of legalized sports betting. Why sports betting? According to the American Gaming Association, the gaming industry, from commercial casinos alone, brought in $40 billion in 2017 allowing for $9 billion in tax revenue to be sent to the 24 states that boast commercial casinos.

Kentucky has none. But Bevin took the AG’s advice and called for a special session at the end of the year to reflect on the issue.

“Kentucky’s pension crisis represents the single greatest threat to the long-term financial health of the Commonwealth,” said Bevin, who understands that legal sports betting would offer double-digit millions a year in tax contributions to support the cause.

An Overview of KY House Bill 175

The bill’s text allows for both on-location and mobile betting in the state with a 9.75% and 14.25% tax rate, respectively.

Players would be able to wager from anywhere within state lines, in accordance with the federal Wire Act, but must sign up in person at one of the horse racing tracks in the state.

Both professional and collegiate sports betting would be permitted; however, the bill prohibits any wagers being taken on in-state universities, regardless of where the game is being played.

Research from Commonwealth Economics suggest the state could bring in as much as $48 million a year, should they legalize the industry before neighboring states do. If legislators miss out on this year’s opportunity, that number drops to $20 million a year.

The bill also would bring internet poker and fantasy sports into legality but legislators are running out of time as the legislative session adjourns on March 29.

Furthermore, because HB 175 would raise and spend money for the state, a 60% majority is required in the House of Representatives, according to Kentucky’s 2018 approved spending plan.

News tags: | |