We’re now officially less than a month from the first legal sports wager being placed in the Commonwealth of Kentucky, with in-person wagering set to go live in the Bluegrass State on September 7. Mobile sports betting will follow suit later in the month, with the launch date set for September 28.
It’s a change in tactics from what we’ve seen from most other states that have already launched, which timed their debuts around the new year in order to maximize the rush of excitement caused by a flurry of new bettors during the busiest months of the betting year, the NFL playoffs and the NCAA Men’s Basketball Tournament. At first glance, it looked like Kentucky was set to employ the same strategy, but Governor Andy Beshear put the pedal to the floor, looking to maximize revenue by getting things started as quickly as possible.
As it is now, the retail launch will coincide with the start of the NFL season: the mobile launch as the college football season hits full stride with the beginning of conference play.Everyone knows that college sports are a way of life in the Southern United States, where the SEC reigns supreme, and it’ll be interesting to see whether Kentucky’s aggressive timeline will be adopted by the next southern states to legalize the pastime.
Some of the biggest sports betting launches (in terms of revenue) occur at the same time as a local team is in the midst of a championship run.The state of New York set all time highs for the industry in its first year of operation, thanks to a deep playoff run from the NFL’s Buffalo Bills and a trip to the Eastern Conference Finals for the New York Rangers of the NHL.
While Kentucky doesn’t have any teams in the four major professional sports to rely on for a shot in the arm, the Kentucky Wildcats’ men’s basketball team looks like they’re ready to dance for a title during the March Madness tournament this season with another top recruiting class from hall of fame head coach John Calipari.
While it’s impossible to know just how much a successful season for the Wildcats (or other in-state programs like the Louisville Cardinals) could impact the betting economy in the Bluegrass State, it is possible to look at some of the numbers on the upcoming Kentucky betting sites in order to forecast how lucrative the industry will be.
The gaming revenue tax levied against betting platforms varies between 9.75 percent for retail sportsbooks and 14.25 percent for online sportsbooks, which is among the lowest in the nation. New York’s record breaking year came about because of a 51 percent tax rate (along with the fourth-largest population of any state in the union).The state will receive additional revenue on a periodic basis through the fees required in order to acquire a sportsbooks operators license: a flat rate of $500 thousand for the initial license, and a $50,000 renewal fee charged every year. With as many as 14 sportsbooks set to open up shop in the commonwealth, that’s $7 million in year one and $700 thousand in each year after that.
Again, those numbers are pretty low compared to some other states, but Kentucky doesn’t have the negotiating firepower that more populous states do. They sit squarely in the middle of the pack, a respectable No. 26 in total population, but their projected nominal GDP per capita of $60,170 for 2023 sits well behind that, falling to the No. 44 slot.
When Governor Beshear signed the bill permitting sports betting into law in June, lawmakers supporting the legislation noted that the commonwealth expects to bring in somewhere in the ballpark of $23 million each year from the pastime through the combination of licensing fees and tax revenue, a figure that is expected to increase in the coming years as the industry gains a foothold.
That revenue is going to go toward Kentucky’s Permanent Pension Funds, supporting retirees in the Bluegrass State. Senior citizens made up between 17 and 18 percent of the population during the 2020 census, a proportion likely to grow as the Baby Boomers continue to age out, so it’s a savvy move by Kentucky politicians seeking re-election.
