Kentucky Legislature Eyes Sports Gambling As a Way to Make Up Billions in Pension Shortfall
The employee pension system is currently about $39 billion in debt. This is one of the country’s worst retirement plans and has troubled legislators for years as they’ve searched for a solution. Some lawmakers in Kentucky think they may have found a solution, even if the fix is temporary. A number of individuals who work in Kentucky’s government think sports gambling could be financially beneficial for the state.
A number of recently introduced bills would make sports betting legal in Kentucky. This became possible after a May 2018 Supreme Court decision that allowed other US states other than Nevada to permit sports gambling. A portion of the revenue from this form of gambling would be devoted to improving Kentucky’s pension system, which is severely underfunded.
Representative Adam Koeing (R) states that while gambling on sports gaming will not completely solve the pension issue, it could improve it. “Each little bit helps,” he asserted. “I think there’s a lot of folks, particularly Democrats, who campaigned on finding revenue,” Koeing added. A key committee recently passed Koeing’s bill for sports gambling.
Kentucky is only one of the states that are seriously considering making sports betting a legal practice. At least 22 other states are thinking about making this form of gambling legal for the residents. So far, seven states in the country have joined Nevada in legalizing sports betting after the decision from the Supreme Court.
Legislators are motivated to ensure Kentucky can properly regulate gambling, since it is a process that has operated covertly in the state for some time. The state government also wants to be able to benefit from the revenue, even if the profits are not extremely high.
Associated Press recently reviewed all of the sports betting bills that have been introduced this year. Therefore, far, there have been more than 100 bills. The review caught the attention of legislators, but raised questions about how sports betting would be handled in various states. Sports leagues, fantasy sports companies and casino, as well as other gambling businesses, are lobbying those in charge of creating laws in hopes that legislation will meet their preferences.
There are several details of gambling laws that are being debated among lawmakers. Some legislators want to know how sports betting will be taxed and regulated. Others are inquiring about where bettors will place their wagers and whether betting on college teams in Kentucky should be allowed. Lawmakers are also curious to see how Kentucky should spend its share of the tax revenue gained from sports gambling.
The strong possibility that sports betting will bring in another key revenue source for Kentucky is the motivating factor for several governors and lawmakers who support legalization. Recently, Illinois governor J.B. Pritzker (D), proposed a budget that is built around legalizing sports betting and marijuana to help reduce the state’s pension debt, which is tens of thousands of dollars. Governor Ned Lamont (D) of Connecticut and New Hampshire’s governor Chris Sununu (R) also made similar moves in calling for legal sports gambling in their budget addresses.
While many are optimistic about the possibility of legal sports gambling and the benefits it could provide, there are several things to consider. The reality is that sportsbooks have an approximate 5% profit margin. The portion that goes to the state is usually very small. Even for states that have an estimate of how much revenue sports betting could bring in, the numbers are only a small fraction –just one percent – of the state’s total budget.
A Kentucky bill analysis confirmed that sports gambling taxes, which are set between 10.25 and 14.25 percent of the sportsbook’s winnings, could result in $20 million for the state in terms of revenue. If Kentucky’s neighboring states do not follow suit, the amount could increase to $48 million, but this is not likely. Last year, West Virginia, one of the states that border Kentucky, legalized sports betting. This form of gambling is also being considered in all the rest of the states that border Kentucky.
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