Sports gambling discussed as first pension fix recommendation deadline looms

FRANKFORT, KY (WAVE) - One way Kentucky lawmakers said they can chip away at the state’s $43 billion pension shortfall is to legalize sports gambling.

House Bill 175 would do that, as well as codify and legalize online poker and fantasy sports in the state.

A committee in Frankfort was able to scrutinize it Wednesday, but did not vote on it.

Legislators admit sports gaming wouldn’t solve the pension funding problem, but they do say it’s a start.

“There are estimates that the U.S. adult population wagers between $107 billion and $150 billion illegally on sports,” John Farris, the founder of Commonwealth Economics, said.

The bill’s sponsor, Rep. Adam Koenig (R-Erlanger), said his goal is to turn customers away from an already thriving black market, and cash in legally for the state.

Even if the governor doesn’t push back on the issue he disagrees with, the revenue measure may be tough to pass in a non-budget year.

“We have a lower threshold to override the veto than we do to pass the bill outright,” Koenig said.

If Kentucky legalizes sports gaming before most of its neighbors though, Commonwealth Economics founder John Farris said it could see tax revenues as high as $48 million, but, more likely, if surrounding states also pass similar laws that revenue could be closer to $20 million.

Revenue would be split among funding the regulation, gambling addiction services and the majority paying off pensions.

The bill would legalize sports betting and some prop bets that are not related to sports -- which has some concerned.

HB 175 would also legalize online poker and fantasy sports.

A representative from the company FanDuel spoke to the committee, asking that language be removed that would require an extra step for people to sign up and verify their age in-person at racetracks to participate in mobile or online betting.

The company also urged lawmakers to allow bets on Kentucky college sports, which the bill prohibits. Creators cited a concern over corruption.

“Considering there are no professional teams located in the state, one could conclude Kentuckians are currently betting on Kentucky college sports and by not regulating these activities the bill could encourage betters to continue betting on illegal offshore apps,” Stacie Stern, a government affairs representative for FanDuel, said.

The Kentucky Family Foundation also raised questions about allowing the Horse Racing Commission to oversee sports betting, adding it doesn’t have to follow executive branch ethics guidelines.

The group was also concerned the bill would be unconstitutional.

Koenig said he doesn’t think the bill violates the constitution based on talks with other legislators, but admits a legal challenge may arise.

Senate majority leadership said Wednesday it’s hard to tell if the pension working group will meet its first deadline to provide a recommendation for a fix to the crisis on Friday.

They said the group will not meet Thursday. It hasn’t met since the first day of the second part of the legislative session.

If the group does not meet the initial Feb. 15 deadline, it can push back providing a recommendation as far as December.

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