A Kentucky House committee passed four gambling bills Wednesday; those in support of the sports betting bill cited the ability to curb black-market gambling, while David Walls of the Family Foundation of Kentucky called the industry something that is “designed not to create wealth, but to simply transfer wealth primarily from the poor to the wealthy.”
The Kentucky House of Representatives Standing Committee on Licensing, Occupations & Administrative Regulations vetted and discussed the bills before their passage. Committee chair, Northern Kentucky State Rep. Adam Koenig, who is also a co-sponsor on three of the bills, led the committee throughout the voting process.
House Bill 606 aims to legalize sports wagering in Kentucky. The bill still has future hurdles to clear. In this committee, the bill passed unanimously with bipartisan support.
But Walls, Family Foundation’s executive director, said gambling is an overall societal negative.
“Gambling is not a victimless form of entertainment or competition,” Walls said. “That’s simply the truth. And it’s a harsh reality. This type of predatory gambling is designed to prey on human weakness with the government colluding gambling industry to exploit our fellow Kentuckians. This is an industry designed not to create wealth, but to simply transfer wealth primarily from the poor to the wealthy. Government promoted and privileged gambling, including sports wagering, will only further impoverish Kentucky’s poor by taking money from families and shifting it to the gambling industry.”
In response, Koenig said he believes this legislation will help curb black market sports gambling that’s already taking place.
“You hear about these, many of these bills, the parade of ‘horribles’ that will occur if passed,” Koenig said. “Most of the time, if not all the time, this parade of ‘horribles’ never show up. There is no question that there are costs. But those costs exist now. There’s billions being wagered legally in the state on various forms of gaming. According to the American Gaming Association, there’s $2 billion wagered illegally on sports in Kentucky every year. I think it’s important to bring those people out of the shadows to dry up the black market.”
House Bill 607, bipartisan legislation regarding pari-mutuel betting, also unanimously passed the committee. This measure would adjust the tax structure on horse betting and pari-mutuel betting, which is a form of betting in which those backing the first three places divide the losers’ stakes. There’s a 1.5 percent tax proposed for all pari-mutuel wagering, which includes advance deposit wagering, simulcast bets, and historical horse racing.
House Bill 607 would require the Kentucky Horse Racing Commission to self-fund with revenue from historical horse racing. The Thoroughbred Development Fund would be capped at $40 million. Standardbreds would be capped at $20 million. This measure reduces the overall amount going into these funds, providing more money for the state’s General Fund. There would be approximately $27 million more for the General Fund, plus continued revenue growth from historic horse racing.
Koenig believes this legislation will make Kentucky one of the most suitable states to place wagers.
“In addition to taking care of the bettors, it will make Kentucky the place in North America to wager if you’re someone who wagers a lot of money, do it for a living, do it for entertainment, whatever it is,” Koening said.
House Bill 609 passed unanimously with bipartisan support. This bill would establish a problem gambling fund for Kentucky. Proceeds from the Steve Beshear-era PokerStars lawsuit would be shifted into this potential fund to the tune of $225 million.
The final discussion of the committee was over House Bill 608, sponsored by Rep. Killian Timoney. The bill would make skill games not authorized by the racing commission, lottery, or charitable gaming. More specifically, the controversial grey machines are being targeted by this legislation. Grey machine developers describe them as skill games and not necessarily slot machines.
Mary Harville, president & CEO of the Kentucky Lottery, said she is concerned these machines cut into the market share of the lottery, specifically in places where the lottery is played, such as convivence stores.
“We face competition from all forms of gambling, legal and illegal but these machines have landed right in lottery locations, which is convenience stores and gas stations,” Harville said. “Grey machines target those very same locations. And that is why unregulated gaming machines are a massive body blow to the Kentucky Lottery.”
Paul Golding of Pace-O-Matic, a manufacturer of games such as Burning Barrel, argued in favor of the machines. Golding believes their business model is disrupting the industry.
“Our games are a lifeline for small businesses,” Golding said. “Pace-O-Matic prides itself on conducting business the right way and following the law. We will not place our games in a market without getting a legal opinion on our software to determine its legality in a market. That’s a lot of investment for us to go in and take a legal risk before entering the market.”
Ryan Straw, a representative from the Kentucky Fraternal Order of Police, argued against House Bill 608. He said the KFOP uses these games to fundraise for law enforcement and veterans organizations.
“We believe that these machines are legal and allowed to be utilized in our business community,” Straw said. “After all, we wouldn’t be sitting here today if the machines weren’t legal. Not only does the KFOP get the much needed funds to support the law enforcement community and their families, but they also help support small business at a time where main streets in our state and country are struggling.”
In the end, House Bill 608 passed. All four bills now move to the House, where House leadership will consider them for a vote.
