Online poker and gambling bill introduced in Kentucky

Haley Hintze Author Photo
Haley Hintze
Posted on: February 27, 2022 15:01 PST

A new bill seeking to authorize most forms of online gambling, including online poker, was introduced in the Commonwealth of Kentucky on Wednesday, February 23. Senate Bill 213 would specifically authorize online sports betting, daily fantasy sports (DFS), and online poker, but not online casino-style games such as slots.

The bill's primary sponsor is State Senator David Yates (D), who represents part of the Louisville metro area. Senate Bill 213 was immediately assigned to the Kentucky Senate's Committee on Committees, and from there on to the General Assembly's Standing Committee on Licensing and Operations. The bill has yet to receive any other formal consideration.

Under the terms of the bill, online-poker operators would submit a $250,000 application fee, and if approved, they would be supervised by Kentucky's Public Protection Cabinet (PPC). Operators would be taxed 6.75% of "net poker revenue" to Kentucky, and also pay an annual license renewal fee of $10,000.

All major poker variants would be allowed, and the initial version of the bill offers no differentiating language between tournaments and cash-game action. The bill includes the standard slate of consumer protection and identity requirements, including location and age verification. Players must be 18 or older to play. The bill also includes language banning the use of computer scripts, though that inclusion is found only within the bill's proposed DFS rules.

Uphill battle toward legalization

Senator Yates' online-gambling legalization bill faces a tough fight, though online poker being piggy-backed onto what is in essence a sports-betting measure allows the poker aspects of the bill some chance at success. Online poker has a combative history in the state, with Kentucky being the only U.S. state to sue an international operator, PokerStars, over the services it provided to Kentucky residents. PokerStars' current owner, Flutter Entertainment, agreed to a $300 million settlement with the commonwealth to resolve a lawsuit that began years before Flutter even acquired Stars.

Kentucky's antipathy toward online gambling dates back many years, making the state not highly ranked by industry experts looking to the next U.S. states where legalization could occur. In 2008, Kentucky officials tried to seize 141 internet domains connected to online gambling, which was finally tossed out of court in 2014. Along the way, however, the state secured its first financial success in connection with alleged grey-market online gambling activity, negotiating a $15 million settlement with partypoker parent

Churchill Downs brand TwinSpires drops online-gambling plans

Even more surprising in the situation involving the new Kentucky online-gambling measure is that one day after Yates introduced his bill, Kentucky's dominant gambling-industry entity, Churchill Downs Inc., announced its intent to exit the online-gambling market.

Churchill Downs Inc. owns Churchill Downs Racetrack in Louisville, home of the Kentucky Derby. CDI also owns TwinSpires, which has been its dedicated online gambling brand, if largely focused on sports betting. In announcing its abandonment of the online-gambling sphere, Churchill Downs Inc. CEO Bill Carstanjen stated that the firm will focus on online horseracing only.

“We will exit the [business-to-consumer] online wagering space,” Carstanjen said, remarking on CDI's sportsbetting plan. “This isn’t the result we wanted, but it is the prudent next step. We remain excited about TwinSpires horse racing.” TwinSpires has encountered stiff market competition after launching in several states, with much of that competition coming from heavyweight DFS brands DraftKings and FanDuel.

Regarding Kentucky's possible online-gambling future, however, Churchill Downs' corporate pullback places additional doubt on the prospects that Yates' legalization bill can pass. Churchill Downs has spent more than a decade seeking expansion into online gambling. Way back in 2011, the company signed prominent poker pro Michael "The Grinder" Mizrachi as a brand spokesman for the racetrack's Breeder's Cup series of horse races.

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