Kentucky basketball could be the jump start to sports betting the state needs.

  • Roughly $22.5 million is projected to be contributed to the state from legal Kentucky sports betting.
  • Comparing the betting market to Mississippi, this could be a vast overestimation.
  • Some believe that the state would only take in around $3 million from football and basketball betting.

FRANKFORT, Ky. – With a measure in the Kentucky Legislature regarding legal sports betting making advancements, the amount of potential revenue for the state is becoming clearer.

If the bill, KY HB 137 – which was reported favorably last week by the House Licensing, Occupations and Administrative Regulations – were to remain unchanged through the House and Senate’s votes, the state would receive up to $22.5 million annual according to projections.

Sports betting in Kentucky would be taxed at 10.25% of all revenue from land-based operators while online platforms would be taxed at an additional 4%. Geared to fund the pension system for the state, Kentucky sports betting revenue would be a crucial benefit to the state.

Though the projected $22.5 million in revenue is only one estimate, some believe Kentucky could be overshooting their estimates, as seen elsewhere around the country.

Stealing A Play From Mississippi

As Kentucky and Mississippi are both in the heart of SEC and both do/would permit the ability to wager on collegiate athletics, similar trends can be drawn.

However, as Kentucky is slated to authorize mobile and online betting – something that Mississippi has yet to legalize on the state level – the benefits could be slightly greater.

Since the launch of Mississippi sports betting, the state and sportsbook-hosting cities have collected over $6.7 million in tax contributions. This comes with a tax rate of 12%, as two-thirds of the money is given to the state and the remaining third to the cities that host sportsbooks.

But, as seen in many states with both legal retail and online sports betting, nearly 80% of all betting action occurs over the online platforms.

With the ability of Kentucky residents and visitors to be able to wager from their phones, the betting handle would be assumed to be much higher. Still, this benefit may not be too much of a factor regarding the increase in revenue.

Overshooting Kentucky Sports Betting Revenue

With SEC fans being some of the best followers in the country, and as the SEC teams are commonly broadcasted on national television, the focus of bettors will surely be on the local teams.

Take football for example, which has seen over $200 million in wagers at the retail Mississippi sportsbooks since the state’s launch August 2018. Add in the fact that Kentucky is a heavy basketball-loving state which has seen over $100 million in wagers in Mississippi and liberal estimations can have Kentucky garnering this much action in just one year.

If Kentucky followed suit and collected roughly 7% of all sports betting action as revenue, the state’s sportsbooks would keep about $21 million from these two sports alone. Contributing four-fifths of this total as online revenue, the state could see upwards of $2.5 million from online football and basketball sports betting revenue. For retail sports betting, just over $430,000 would be collected.

This is certainly far off from projections, but only time will tell what the end result will be. Online sports betting will definitely be a benefit to the state. However, if the two most wagered on sports would only generate the state around $3 million, where is the other $19 million coming from?

Either way, legislators will be crafting this bill throughout the entire 2020 Kentucky legislative session. Perhaps they will make changes to increase the taxation amount or maybe they will create a strong enough industry to be able to poach sports bettors from neighboring states that have approved sports betting Indiana, Illinois, Tennessee, and West Virginia.

The Kentucky legislative session ends on April 15; therefore, the lawmakers will have plenty of time to revisit their revenue estimations. With KY HB 137 moving swiftly through House committees, perhaps the Senate will be the one to bring the state back down to reality.

News tags: | |