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Sports betting bill favors Kentucky Speedway, Churchill Downs
7th February, 11:59Should House Bill 137 advance far enough for Gov. Andy Beshear's signature, sports betting licenses will be available to all of Kentucky's racetracks and to those professional sports venues "with seating for at least fifty thousand and where professional sporting events are held under the auspices of a professional league recognized by the racing commission ..."
In other words, Kentucky Speedway.
No other non-equine enterprise would be eligible. No other Commonwealth venue comes close to qualifying. If a windfall awaits those allowed to book bets legally in Kentucky, it will fall most favorably on those associated with horses and horsepower. And perhaps not as favorably as it might for the state's problem pension fund.
With limited sports betting licenses and without competitive bidding, Kentucky might be leaving millions of dollars on the table should the bill become law. Though Kentucky licensees would be required to pay an annual $50,000 fee for license renewal, House Bill 137's proposed $500,000 start-up fee is just 5% of the $10 million Churchill Downs paid the Pennsylvania Gaming Control Board to open a sportsbook at its Presque Isle Downs and Casino.
As Kentucky Senate President Robert Stivers asked The Courier Journal's Joe Sonka, "Why are we picking winners and losers? Why not open it up and let the market take its place?"
Related: Sports betting could be coming to Kentucky. Here's what to know
Good questions. Horse racing and breeding are signature and influential industries in Kentucky, a source of tens of thousands of jobs and profound economic impact. Yet granting the state's racetracks and Kentucky Speedway exclusive rights to a potentially lucrative revenue stream, and doing so without an arm's-length test of what the market might bear, runs the risk of being perceived as preferential treatment.
"Speedway is a major-league sporting venue," said Rep. Adam Koenig, House Bill 137's author. "Venues like Wrigley Field and Nationals Park are getting their own skins (individually branded websites). So this is not unusual among sporting venues, and will one day be the standard. If we want to ever get an NBA team in Louisville, this will probably be a requirement."
Up till now, public discussion of sports betting in Kentucky has centered on questions of morality and of revenue lost to other states, illegal bookmakers and offshore outlets. But if House Bill 137 has the support its backers claim, and will soon move to the Kentucky senate for further scrutiny, legislators should drill deep into the numbers to determine if this is the best deal they can get.
Read this: Gov. Beshear pitches passage of sports betting bill, but Senate president isn't so sure
As the bill is written, the top tax rate for mobile wagering in Kentucky would be 14.25%. This is less than 2/5 of Pennsylvania's 36% rate, which generated more than $4 million from sports wagering in January alone. Granted, Pennsylvania's population is nearly three times that of Kentucky, and its 13 casinos are 13 more than operate in the Bluegrass. Still, with online handle accounting for more than 85% of Pennsylvania's sportsbook business, the proximity of betting parlors is no issue to anyone within reach of a smartphone application.
"A lot of folks said our fees were too high," said Doug Harbach, communications director for the Pennsylvania Gaming Control Board. "But pretty much every casino has signed up. They were lined up to get into Pennsylvania."
Where barriers to entry are lower, the lines are even longer. Political consultant Ryan McCollum is organizing bar and restaurant owners in Massachusetts in pursuit of a piece of the sports betting action for small businesses.
"Going against Goliath is hard," McCollum said. "What these guys don't know is their own power."
Mark Simendinger is more at ease with political maneuvering. The general manager of Kentucky Speedway, once the boss of Kentucky Senate Majority Leader Damon Thayer, has been an effective lobbyist as legislators began to see sports betting as a more distinct possibility.
Earlier: Majority leader says Kentucky Senate likely to pass sports betting bill if House approves
"What I heard was that it was going to be limited to racetracks..." Simendinger said. "(But) We've got more money invested than anyone else does - maybe I'll give you Churchill Downs. We're the only ones conducting a major-league sport on a regular basis. And we wouldn't be allowed to bet on it.
"If we were out of this bill, then you would come to the track, we would be putting on a show on our dime, and you'd be able to go to Ellis Park and bet on it, but not at our place. That is not right."
With a limited racing schedule and a relatively remote location, Kentucky Speedway would seem better suited to a mobile betting application than a brick-and-mortar sportsbook. As of the 2010 census, Sparta's population was 231.