Kentucky Combines Online Poker & Sports Betting Legislation in HB 175

Kentucky is coming in strong onto gambling. The state has seen a series of proposed bill hit different legislator snags, although none was turned down outright. This must have emboldened Adam Koening who submitted his own draft last week.

Kentucky offers an interesting landscape for sports betting regulation. None of the proposed bills has been able to clear all legal hoops, but that hasn’t dispirited various lawmakers from re-drawing their proposals and trying again.

This Tuesday, State Rep. Adam Koening introduced his own take on sports betting with House Bill 175. Mr. Koening’s bill is an ambitious plan to introduce the segment to the state in one brisk, sweeping action.

The document concerns land-based venues as well as online facilities, with the latter being taxed slightly steeper. HB 175 outlines 14.25% on gross revenue from wagers placed via smartphones and only 10.25% on all other types of bets.

The taxation is fair as it allows operators that will focus on the mobile segment to even out with the land-based venues, which have to maintain their on-site facilities. Mr. Koening is not alone in delivering the bill either.

He has the backing of a vast coalition, numbering 14 other lawmakers who just like Mr. Koening can see the merits of creating a regulatory framework.

Regulation Beyond Sports Betting

If Kentucky chooses to regulate its industry based on the draft provided by Mr. Koening, the state can expect the introduction of many complementary segments that will most likely be a boon to the operations of land-based and online companies.

The state’s lottery will be in charge of overseeing sports betting as well as online poker and the sale of lottery tickets, bringing into its remit all segments. The bill doesn’t include live poker games, but this is unlikely to put a dent in the expected windfall for the Commonwealth, the legislation at one place.

HB 175 is a comprehensive and ambitious read by Mr. Koening and his followers who are pushing for a broad inclusion of all relevant segments, including online poker. Online poker is lined side by side with “all forms of gaming” in the state, on top of the already proposed sports betting framework.

Not only is online heavily featured in the bill, it’s also one of the most generously taxed activities, with only 6.75% going back to the state’s coffers.

Koening Highlights the Benefits of Extra Taxation

Mr. Koening is nowhere near disturbed by the recent challenges that online poker and gambling could face following the controversial Wire Act re-interpretation. Instead, Mr. Koening pointed out to another decision of particular legal bearing, i.e. that of SCOTUS:

In light of last year’s Supreme Court decision, it is time that we take the proactive step of providing adults the freedom to legally engage in sports betting. Kentucky has a chance to be ahead of the curve on this issue, while also potentially capitalizing on much-needed revenue gains without raising taxes.

Mr. Koening is right to point out that taxes can also alleviate burden on the state coffers and also keep families state-wide spending less on public funds. However, Mr. Koening is also very down-to-earth and understanding of the challenges that lie ahead.

The state coffers, he admits, aren’t going to swell with untold riches, but the tax will certainly help a little:

By no means do I expect this legislation to produce a massive windfall of revenue into the state coffers that will solve all of our financial problems. But with numerous citizens already engaging in betting practices, it is time for the Commonwealth to reap some of that revenue, while also allowing adults the freedom to make their own decisions.

Poker Love in Time of Legal Cholera

While Mr. Koening’s bill seems well-measured and inclusive of all future segments that promise growth, he must be cognizant of the lurking dangers lying ahead. Sheldon Adelson, the famed casino mogul, has had his hands in the undoing of the Wire Act opinion.

This is evidence that is only beginning to surface recently with the Washington Post and The Wall Street Journal calling out Mr. Adelson’s involvement in the nefarious operations.

Numerous poker professionals have called out Mr. Adelson’s involvement in the segment, including the likes of Daniel Negreanu and Chris Moneymaker who didn’t hesitate to describe the casino boss in the most robust terms.

The Wire Act interpretation which will gather legal momentum by the end of March can indeed throw a spanner in the works. Since the Wire Act oversees the transfer of data packages between states, online poker may be at a serious loss to take off beyond the borders of Kentucky.

Is Share-Liquidity Important to Mr. Koening?

The 37-Bill doesn’t specify anywhere that it would seek to add Kentucky to a shared liquidity scheme. In light of the oncoming Wire Act, this is imprudent many will agree. New Jersey and Pennsylvania already expressed their discontent with the rather ham-fisted way the Office of Legal Counsel had gone U-turn on the online poker industry and gambling.

This comes less than a year after a major victory was won in the Supreme Court of the United States (SCOTUS) with NJ defeating PASPA 1992. It’s understandable that rollback on all this progress can be upsetting.

Caught in the middle of it all, Mr Koening beats on, a boat against the current.

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