Kentucky sports betting is getting off to a blazing start. On Thursday, Gov. Andy Beshear announced the first tax figures, revealing the state is already well ahead of revenue projections.
The state has received nearly $8 million in taxes from revenues generated by operators in September and October, the first two months of legal sports wagering, he said. Kentucky’s brick-and-mortar sportsbooks opened at racetracks and historical horse racing gaming halls starting Sept. 7. Seven Kentucky betting apps operators launched three weeks later.
That tax money will primarily go toward addressing the state’s public pension shortfalls, with some funding will be set aside for the Kentucky Horse Racing Commission, which has oversight authority for sports wagering and responsible gaming education and promotion. More details regarding the Kentucky sports betting numbers will be published on the KHRC’s website, with monthly reports becoming available starting next week.
On Pace to Top Projections
While House Bill 551 was going through the Kentucky General Assembly earlier this year, the tax revenue for the state was projected to be about $23 million in the first full year. However, several people thought that estimate from the Legislative Research Commission may have been low.
“If those numbers hold in the coming months, revenues will far exceed official LRC estimates as many of us predicted,” state Rep. Michael Meredith, the Oakland Republican who sponsored HB 551, told BetKentucky.com on Thursday afternoon. “In fact, they will come close to doubling the estimate.”
The upcoming reports from the KHRC may shed some light on why the tax numbers are higher, depending on the detail provided. The $23 million projection is not significantly different from the estimate offered when then-state Rep. Adam Koenig first proposed legalizing sports betting beginning in 2019. However, the sports betting market has changed over those years. That includes the types of wagers operators promote on their apps.
Operators like DraftKings and FanDuel Sportsbook Kentucky have emphasized their parlay products, including same-game parlays. The multi-leg bets can offer lucrative odds for minimal amounts, but they also come with added risk since the bettor needs to pick each leg correctly to win. That has allowed operators that promote such bets to generate higher revenues, which in turn means more tax dollars for the states where they’re licensed.
Sports betting is cyclical, with states reporting their highest handle figures in the fall, coinciding with college and pro football. Sportsbook revenues, though, don’t always follow suit. For example, several operators nationwide were hammered when nine NFL favorites covered their spreads for games Nov. 26.
In addition, sportsbooks can take a revenue hit in a state during a big event. Should Kentucky win the NCAA Basketball Tournament in April, it’s possible all those payouts to Big Blue fans could lead to some operators posting net losses here for the month. That said, Thursday’s announcement still bodes well for Kentucky surpassing $23 million in taxes for the state’s fiscal year, which ends in June.
Handle Approaching $700 Million
The first tax figure wasn’t Beshear's only update about sports betting on Thursday. He also reported the state’s sportsbooks have taken more than $656 million in wagers through Sunday. Earlier in the week, Beshear reported a cumulative handle of $550 million. The Thursday figure included the last two weekends, which included some big events for in-state teams — the Louisville-Kentucky football game Nov. 25 and Louisville playing in the ACC Championship on Saturday.
Mobile wagering dominates Kentucky sports betting, with the $629.5 million bet through apps and websites representing nearly 96% of the market. The sportsbook revenue and state tax figures for November will be announced later by the KHRC.
“Before we legalized sports betting, this money was going to other states, or the betting was being done illegally,” the governor said. “Now, thanks to our efforts, these dollars are staying right here in Kentucky, where they help us build a brighter future for all of our people.”