Kentucky Working Group Agrees To Tax on Net Revenue and No Integrity Fee
Kentucky’s working group on sports gambling has come to a couple of decisions about sports betting in the Bluegrass State. Taxes on sports wagering will be based on net revenue, not handles, and there won’t be any integrity fees paid to professional sports leagues
According to an email sent to Sports Handle, Julian M. Carroll, a state senator who is also a former governor,. In Carroll’s sports betting bill, that he pre-filed earlier this summer, he originally wanted to base the tax on handle, not net revenue. Like with all the other states that have so far legalized sports betting, the income from taxes are an important part of sports gambling legislation. Carroll’s original bill called for a 20 percent tax on handle, because that’s how the state taxes its pari-mutuel betting.
Integrity Fees for Pro Sports
Both the NBA and the MLB have demanded an integrity fee be made payable to the leagues in all proposed states that are legalizing sports betting. They want an amount equal to one percent of sports betting handle over any given period, which would amount to about 20 percent of an operator’s revenue.
The reason for this “fee,” according to the leagues, is that the funds would go towards a fleshed-out monitoring system that would make sure all games played under their banner would be free from any shady influence from sports betting. Another concession from the leagues is that they believe they are entitled to a part of the profit that the bookmakers would pay as a price for having sports for people to lay bets on.
Out of the six states with legalized sports betting, none of them have an integrity fee, which means Kentucky will fall in line with the consensus. The states with operational sports betting, Mississippi, Delaware, and New Jersey, as well as those which have passed legislation but have not yet opened for sports betting business yet, Rhode Island, West Virginia, and Pennsylvania, do not pay any type of integrity fee. The only state that has talked about paying an integrity fee to professional sports teams is New York. However, that state didn’t legalize sports betting during the 2018 legislative session.
New York Senator John Bonacic (outgoing R-District 42) and Representative Gary Pretlow (D-District 89) have been developing legislation that will call for an integrity fee of 1.5 of 1 percent on all wagers, which is down from the one percent that the professional sports leagues were originally looking to receive.
Legal Sports Betting in the United States
Until May of this year, sports betting in the United States was largely illegal outside of Nevada and a few other states that were grandfathered in prior to 1992. The Supreme Court overturned the legislation, called PASPA or the Professional and Amateur Sports Protection Act, and said it was unconstitutional. This left the matter of sports betting up to each individual state. Several states had already passed legislation prior to the decision in the hopes that PASPA would be overturned, and have already begun offering legal sports betting. Still other states are working on the process.
Sports Betting in Kentucky
There is no specific state law against sports betting in Kentucky; however, all wagering is prohibited aside from some exceptions like pari-mutuel wagering on horse racing, charitable gaming, and the state lottery. This means that, based on previous jurisprudence in Kentucky, lawmakers will not be required to make an amendment to the Kentucky Constitution before legalizing sports betting in the Commonwealth of Kentucky.
Lawmakers in the Bluegrass State have spent all summer researching sports betting and how it could work in the state. A bi-partisan group of nine members from both chambers have met two times so far to try to come to a consensus so they will be able to introduce a passable bill or bills during the next legislative session. The working group has been looking at how other states are regulating sports betting to see how those schemes could apply to Kentucky, and also looked into afrom Dinsmore & Shohl LLC, a law firm, that determined that the time is right to legalize sports gambling in Kentucky.
Like a lot of other states, Kentucky has a cash-flow problem, but according to Carroll, the more important aspect of developing legislation for sports betting is to protect its citizens, not the potential tax revenue that sportsbooks would bring the state.
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