Kentucky is one of more than a dozen states that have considered changing its sports betting regulations this year. The growth of online sportsbooks, along with other sports betting-adjacent industries, all but assures legislative action is just beginning.
- Kentucky’s sports betting bill would raise the legal age from 18 to 21 and ban in-state college player prop bets.
- The legislation would regulate daily fantasy “plus” games, fixed-odds horse racing, and introduce taxation for prediction markets.
- Unregulated prediction markets would be banned, affecting major operators like FanDuel, DraftKings, and Fanatics, though legal challenges may delay enforcement.
A Kentucky Senate committee last week received a wide-ranging gaming bill passed overwhelmingly by the House days earlier. There’s no timeline for further action, but the bipartisan House vote - and growing interest in making changes to existing sports betting rules - gives Kentucky’s sweeping bill increasing chances of passage.
The bill would raise Kentucky sports betting's minimum age from 18 to 21, aligning it with most of the other 39 states with regulated sportsbooks. Kentucky is the most populated of the five states that allow betting by users under age 21.
If passed, Kentucky’s regulated sportsbooks could no longer offer individual player prop bets on games involving state universities. This would preclude bets on individual points scored or yards receiving for University of Kentucky or University of Louisville student-athletes, for example.
Individual player prop bans have been a legislative priority of the NCAA. A handful of states have considered restrictions, but few have acted; Washington lawmakers this year approved individual college player prop betting, though it also excludes wagering on in-state participants.
The bill would not increase Kentucky’s tax on online sportsbooks' gross gaming revenue, which, at 14.25%, is around the country’s median average. At least a half-dozen state legislatures or governors have proposed sports betting tax increases this year after roughly that many approved increases the year prior.
Political response to sports betting
The sweeping Kentucky bill comes as politicians in statehouses across the country are grappling with rapidly changing gambling expansions.
Legal sportsbooks have accepted more than $650 billion since the Supreme Court struck down the federal wagering ban in 2018. Nearing a decade of legal betting, a growing number of policymakers are looking to a combination of tax increases and regulatory changes to generate new revenues while offering customer safeguards.
Elected officials have also had to contend with a growing number of new offerings that have sprung up since legal sports betting began. In Kentucky, the sports betting regulation bill introduced this year would regulate the new generation of daily fantasy sports “plus” games popularized by brands such as Underdog and PrizePicks as well as offer fixed-odds horse racing.
The legislation also attempts to deal with prediction markets, the most consequential gaming development since at least the court’s 2018 decisions.
Kentucky’s bill is one of the first in the country to tax prediction markets operating in the state, proposing the same 14.25% levy as sportsbooks. The bill would also ban sportsbook companies that offer unregulated prediction market sports event contracts, one of the first states to introduce such statutory language.
If passed, that means FanDuel, DraftKings and Fanatics, all of which offer both prediction markets and sports betting platforms, would run afoul of Kentucky law. The three companies combine for more than 75% of the state’s sports betting revenue.
Even if passed, the bill would be years from taking effect. Prediction markets have maintained they are not subject to state laws, arguing that position across more than 20 active legal challenges in courtrooms nationwide. The final legal status for these operators likely won’t be determined until the Supreme Court makes a decision, which is unlikely until 2027 or 2028.
It remains to be seen what impact Kentucky’s range of proposals would have on the industry if the current proposal passes. But the importance of the full scope of online gaming has become increasingly clear with the legislative momentum (and urgency) in a growing number of states.
