Is Kentucky on the trail to online poker?

Kentucky Online Poker Bill Clears First Committee Hurdle With Ease

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As expected, the Kentucky legislature was quick to get the ball rolling on online poker this year.

State Rep. Adam Koenig formally introduced HB 137 on Jan. 7, the first day of the new lawmaking session. His bill focuses primarily on sports wagering and fantasy sports, but also includes online poker. And it has now taken its first concrete step toward becoming law.

Last week, HB 137 received a green light from the Licensing, Occupations & Administrative Regulations Committee (LOARC).

The smallest hurdle in Kentucky

LOARC is one of 19 standing committees in the Kentucky House of Representatives. Its purview covers all matters of professional licensing not specifically assigned to another committee. This includes an eclectic array of professions such as auctioneers, architects, and cosmetologists.

More relevantly, however, it includes the following:

  • Racing
  • Prize fighting and wrestling
  • Places of entertainment
  • Alcoholic beverage control

The bill received unanimous approval from LOARC last week. There was, however, never any real chance that it would fail to pass committee. The bill has 36 sponsors at the moment, including Koenig and 14 of LOARC’s 18 members. There could have been, at most, four dissenters.

Momentum is on Koenig’s side

Nonetheless, unanimous passage is a positive sign.

Those four other members who voted for it in committee can likely be counted on to do so in the general vote. If so, that brings the total to 40 sure votes out of 51 needed to pass. Koenig, then, just needs to find 11 more votes before the session ends in mid-April.

The general consensus is that HB 137 is very likely to pass. A similar bill failed to muster the necessary votes last year, but there are several reasons this year should be different.

Even-numbered years are budget years in Kentucky, for one thing. That means that the legislative session is longer and bills that involve taxation — which HB 137 does — need fewer votes than they would in non-budget years.

Furthermore the state’s new governor, Andy Beshear, is a vocal proponent of legalized gambling.

A competing bill appears

Mustering the necessary votes in the House isn’t the only challenge HB 137 will face, however. There is also a competing sports betting bill in the Senate, numbered SB 24.

It’s not uncommon for similar bills to be working their way through the House and the Senate simultaneously. In the case that both pass in their respective chamber of the legislature, the House and Senate will work together to reconcile the two and produce a compromise bill both can agree on.

What’s worrisome there is that the Senate bill contains only provisions for retail sports betting. It doesn’t cover DFS, mobile wagering, or online poker. That could be an indication that the online provisions of HB 137, if they clear the House, will face opposition in the Senate.

The most important difference between SB 24 and HB 137 is that the former would allow the establishment of off-track sportsbooks, while the latter would restrict retail wagering to tracks and other sports venues.

Why is Kentucky poker proposal online only?

Under the provisions of HB 137, sports betting would be the jurisdiction of the state’s racing commission. Online poker, on the other hand, would be overseen by the Kentucky Lottery Corporation. Interestingly, it contains no provisions for land-based poker rooms.

Also notably absent from the bill is online casino gaming. That’s typically a higher priority than poker for most states.

The likely reason for both omissions is the state’s lack of land-based casinos. It would be unusual to legalize online slots and casino in the absence of a land-based option. It would also be odd to set up standalone poker rooms without other forms of land-based gambling.

That doesn’t mean that land-based gambling isn’t coming to Kentucky, however. There are two more bills in the House at the moment, HB 7 and HB 181, dealing with that topic. The sponsors of those bills overlap significantly with those of HB 137.

Problems with KY sports betting provisions

HB 137 mandates a 6.75% state tax on online poker revenue. Aside from that, however, it leaves much of the regulation surrounding poker to the discretion of the Lottery.

On the other hand, it contains a lot of detail when it comes to daily fantasy sports and sports betting.

Daily fantasy sports was already available in Kentucky, but the bill would impose formal regulations on the industry. Some of these relate to game integrity, such as requiring companies to have their contest registrations audited by a third party on an annual basis. Others are customer protection measures, such as defining what constitutes a “beginner” and a “highly experienced player.”

The specifics of the bill’s sports betting provisions are more problematic, specifically as regards online wagering. Players who want to bet online will first have to register in person at one of the state’s racetracks or other licensed betting venues.

This questionable policy is the default in Nevada and has more recently been implemented in some other states, including Rhode Island. There, in-person registration has resulted in considerably lower popularity of online betting compared to other states.

What’s next for KY online gambling bill?

Next up on HB 137’s legislative journey is is a stop in the House Rules Committee.

That committee comprises nine members and is sometimes described as “the traffic cop” of the House. Its job is to decide whether a bill is ready for a vote. If not, it will send it back to the original committee for revisions. Otherwise, it will set a date for the bill’s final reading and vote.

Since this bill’s 2018 predecessor made it past the Rules Committee, it’s unlikely that it will run into problems at that stage. Until the bill comes before the it, however, we don’t know exactly what the timeline will be until a vote — only that it must happen before the legislature adjourns in April.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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