Kentucky Bill Risks Tax Revenue to Fight Prediction Industry

As the fight between states and the prediction industry intensifies, the Bluegrass State is putting its foot down.

The Kentucky House passed HB 904 on Thursday, proposing a massive overhaul of the state's sports betting market. Two major changes involve raising the minimum age from 18 to 21 and banning under-bets for player props involving college athletes in the state.

However, the biggest change is a proposed rule that would force out sportsbooks that also operate prediction platforms. 

The bill was forwarded to the Senate, where the Committee on Committees is reviewing it.

Major Sportsbooks Launch Predictions

While many lawmakers in the US have discussed bans on sportsbooks that offer predictions, few changes have been made. That’s because the country’s top three online sports betting operators have entered the prediction market industry.

DraftKings, FanDuel, and Fanatics launched their own prediction platforms over the last few months. While they have been keeping them focused on states where their sportsbooks aren’t available, no guarantee that they will continue to do so.

With no state regulations or taxes, those operators have a chance to see their revenue spike as the industry continues to grow. 

Kentucky Bill Would Put Operators in Difficult Spot

On its face, the decision to sacrifice regulated sports betting for unregulated prediction markets seems easy. However, there is a reason why the country’s top three operators haven’t done so. 

As much promise as the prediction industry has, there is a bipartisan effort to crack down on it. Operators like Kalshi and Polymarket are facing lawsuits from state regulators, attorneys general, and tribal gaming groups. They are seeking to ban the industry, or at least add state-level regulations and taxes.

The court system has not been kind to the industry overall, and public opinion is tanking as fears over integrity persist. That means the industry could take a massive hit over the coming year, including a full ban.

Proposal Could Kill Kentucky’s Betting Market

While HB 904 would put the pressure on the state’s top sportsbooks, it would also put the state in a dangerous position.

If DraftKings, FanDuel, and Fanatics all were to pull out of Kentucky, thousands of bettors would be left without a sportsbook. While they could choose other operators who would remain, their former platforms would likely target them for prediction markets. They are already creating all-in-one apps, which would make it easy for bettors to use their sportsbook accounts to wager on prediction markets.

There is also the fact that young bettors between 18 and 20 would suddenly be barred from the sports betting markets if HB 904 passes. Prediction platforms have a minimum age of 18, meaning those abandoned bettors would still be able to place wagers. There is no guarantee they’d return to the regulated market once they turn 21, which would make it impossible for Kentucky’s market to grow.