Big Changes Are Coming to Kentucky's Sports Betting Market

Kentucky is about to reshape its sports betting market.

The state legislature overrode the Governor's veto yesterday to pass HB 904. The bill will implement major changes to the state’s sports betting market and regulate the fantasy sports industry. The changes are expected to shrink Kentucky’s market in order to help curb problem gambling.

The bill originally proposed several other drastic changes, but talks with sportsbooks led to some being dropped before it became law.

Prop bets, betting age among the biggest changes

Two changes will have the biggest impact on sports betting in Kentucky.

The first is a ban on player prop bets involving college athletes from in-state schools. This is a big chance for Kentucky, where college athletics are far more popular than in other markets. While it won’t be a full ban on college player props, it will help curb harassment of athletes by local fans.

The other change is the betting age, which will rise from 18 to 21. This will put Kentucky in line with most US markets and ensure sports betting doesn’t enter high schools. However, it will also leave a bettor between 18 and 20 suddenly locked out of their state’s market.

Changes coming for DFS, but not predictions

While changes to sports betting were the focus of HB 904, the bill also delivers a significant change for DFS operators. 

With the bill now law, those operators will need to comply with state regulations and accept a 12.5% tax rate. It will also ban all games where players are competing “against the house,” which some view as a form of illegal gambling.

The biggest winners from the bill may very well be DraftKings, Fanatics, and FanDuel. The trio successfully lobbied state lawmakers to strip a proposal to ban sportsbooks that also offer prediction platforms. They also stripped the bill of a provision that would have ended operators' ability to limit winning bettors.

Beshear vetoes bill over emergency regulations

The effort to pass HB 904 hit a small road bump on Monday when Kentucky’s Governor vetoed the bill. While Beshear confirmed he supports the key changes proposed by the bill, he expressed concern about the language regarding emergency regulations. 

The recently approved bill grants the Kentucky Lottery Corporation and the Kentucky Horse Racing and Gaming Corporation the power to add emergency regulations. That means they can circumvent lawmakers, including the Governor’s office.

Beshear explained the veto in an official statement. 

Under the Kentucky Constitution, the Governor is the Chief Magistrate of the Executive Branch and has a duty to ensure all laws are faithfully executed, including by agencies carrying out the law through regulation. In that role, the Governor reviews proposed emergency regulations to ensure they are necessary and meet legal requirements for emergency filing.

Beshear knew the veto would likely be short-lived, as Kentucky requires only a simple majority in both chambers (which bills already have) to override it.