In September, Flutter paid Kentucky $300 million to settle the state's lawsuit against PokerStars

Kentucky Lawmakers Consider $225M Responsible Gambling Assistance

The Kentucky Derby occupies a special place in the American consciousness. Evocative images of Kentucky Derby hats and mint juleps spring to mind. That classic race at the famous Churchill Downs racetrack has also inspired bettors, perhaps even more than it has milliners and bartenders.

What’s also ingrained in the American psyche is the idea that where there’s legal gambling, like the Bluegrass State‘s horse race wagering, the state will be funding responsible gambling efforts. Unfortunately, that assumption doesn’t always hold up.

Kentucky is currently one of the places it doesn’t. However, that faith may become valid by the time Kentuckians don their bonnets and sip their cocktails this year.

That’s because members of the Kentucky General Assembly are considering HB 609. If it gets their approval, the bill will “appropriate $225,000,000 from the general fund in fiscal year 2022-2023 to the Kentucky problem gambling assistance fund.”

Putting the PokerStars settlement to use

$225 million is a hefty sum. However, lawmakers are confident in pulling it out of the general fund for this purpose. That’s because in September 2021, the Commonwealth of Kentucky settled a lawsuit against the PokerStars brand for $300 million. 

“What better use of that money than to put it to problem gaming?”

That rhetorical question comes in the form of a Feb. 28 tweet from Rep. Adam Koenig, the primary sponsor of the responsible gambling (RG) bill.

The House measure moved into the Committee on Committees on Feb. 28, just in time for Problem Gambling Awareness Month (PGAM).

One of the bill sponsors, Al Gentry, tweeted on Monday:

“As a strong proponent of responsible expanded gaming, I acknowledge one of the glaring omissions in KY is that no gaming tax revenues go to KY Problem Gaming. It is WAY past time to fix that.”

Tax-funded responsible gambling support would be new

Kentucky is a rarity in having its lack of taxpayer-funded responsible gambling assistance called out by its own lottery officials.

On the Kentucky Lottery site today, the responsible gambling page reads:

“Unfortunately, Kentucky provides no [publicly] funded direct counseling services for problem or compulsive gamblers. The Kentucky Council on Problem Gambling, along with the Kentucky Lottery, has advocated for more than a decade for these services to be put in place.”

The RG page points out that the lottery itself is doing the best it can:

“The Kentucky Lottery was one of the first in the United States to establish a ‘Play Responsibly’ program back in 1996, and has served as a model for many other state lotteries. We were the first lottery in the U.S. to hold all three national and international responsible gambling certifications, showing again our commitment to establishing and maintaining best practices.”

If HB 609 becomes law, the Kentucky Problem Gambling Assistance Fund will be overseen by the Kentucky Problem Gambling Assistance Board. The bill outlines using the $225 million outlined for the fund for the lifetime of the program.

How would the money be spent?

Here’s what the bill says about the proposed revolving account to be established in the state treasury:

“All moneys in the fund are appropriated for, and shall be used exclusively for:

“(a) Providing support to agencies, groups, organizations, and persons that provide education, assistance and counseling to persons and families experiencing difficulty as a result of addiction to alcohol or drugs or addictive or compulsive gambling;

“(b) Promoting public awareness of and providing education about addictions;

“(c) Establishing and funding programs to certify addiction counselors;

“(d) Promoting public awareness of assistance programs for addicts; and

“(e) Paying the costs and expenses associated with the treatment of addictions.”

Koenig is the primary sponsor of that and two other pending House bills about online gambling.

“It’ll probably be the most robust program in America,” he said during the press conference.

Another measure – HB 607 – addresses “modernizing” parimutuel wagering regulation. Within that classification is historic horse racing machine regulation. An industry representative has said that HHR has generated $41 million in revenue for the state’s general fund.

Most interesting to many OPR readers, of course, is Koenig’s effort to legalize sports betting and online poker in the state.

Expanding Kentucky’s legal gambling

Anyone attending the Kentucky Derby can stay seated to bet on it.

Louisville-based Churchill Downs Incorporated (CDI) plans to remain in the horse racing business. However, even if the state does legalize sports betting, CDI probably won’t be in a position to take advantage of it.

CDI, which owns the eponymous Churchill Downs in Louisville, is planning to abandon its online casino and sports betting activities. It has been carrying these out under the TwinSpires brand, formerly BetAmerica.

It’s legal to gamble on horse races at the track and via parimutuel wagering, as well as buy Kentucky Lottery products in the state. However, that is about the extent of legal gambling in Kentucky. Kentucky has no retail casinos or card rooms, and no online gambling. Even daily fantasy sports remain a gray area.

That’s why Gentry’s tweet that contained an article link about the $225 million RG proposal also alluded to another effort underway: expanding legal gambling in Kentucky.

To that end, the House is moving forward on HB 606. The Senate is simultaneously considering a similar piece of legislation, SB 213. Those bills call for daily fantasy sports, online sports betting and online poker legalization in Kentucky.

The Senate bill, sponsored by David Yates, is advancing faster than the House’s proposed legislation. It proceeded to the Licensing and Occupations committee on Feb. 25.

Meanwhile, it’s no surprise that Koenig is the primary sponsor of both pending House bills. Koenig, who took office in 2007, sponsored online sports betting legislation each year since the US Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) in 2018.

So far, Koenig’s proposed online gambling bills haven’t had much success in Kentucky. Perhaps the fourth time will be the charm.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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