This article was updated on April 15 after votes in the General Assembly on April 14.
Kentucky’s General Assembly overrode Gov. Andy Beshear’s veto of a wide-ranging bill to make several changes to the state’s gambling market on April 14, ensuring that it remains on track to become law.
Reps. Michael Meredith and Matthew Koch‘s House Bill 904 makes numerous key changes to betting and racing in the Bluegrass State, such as:
- Raising the minimum legal sports betting age from 18 to 21
- Legalizing fixed-odds horse racing wagering
- Licensing and regulating peer-to-peer daily fantasy sports and taxing it at 12%
- Banning “under” player prop bets on in-state college athletes
- Banning betting on elections
- Prohibiting sports betting or DFS licensees who offer or affiliate with prediction market platforms within Kentucky
It passed the state House on March 19 and the Senate on April 1, and House members concurred with the Senate’s altered version that same day.
Although Beshear vetoed the bill on Monday, April 13, his decision was quickly overruled the following day by the heavy Republican majorities in both chambers of the Kentucky legislature, who convened on Tuesday for one of two final days to consider veto overrides. The House voted 67-7 and the Senate voted 26-5 to override the governor.
Governor has serious regulatory concerns
However, Beshear confirmed on Monday, April 13, that he rejected the bill, although none of the specific gaming-related provisions were the reason for saying no.
“I am vetoing House Bill 904 because it would authorize two Executive Branch agencies, the Kentucky Lottery Corporation and Kentucky Horse Racing and Gaming Corporation, to file emergency and ordinary administrative regulations without the Governor’s review and signature,” Beshear wrote in his veto note.
“Under the Kentucky Constitution, the Governor is the Chief Magistrate of the Executive Branch and has a duty to ensure all laws are faithfully executed, including by agencies carrying out the laws through regulation. In that role, the Governor reviews proposed emergency regulations to ensure they are necessary and meet legal requirements for emergency filing.
“Authorizing an agency to file an emergency regulation in this manner would prevent the Governor from carrying out his constitutional duties and allow boards and agencies to impose rules on Kentuckians without executive oversight, including boards whose decisions impact public safety.”
The General Assembly votes mean that, despite Beshear’s concerns and his decision to reject the legislation, HB 904 is set to become law 90 days after the end of the Kentucky legislative session.
Prediction ban takes the headlines
While the omnibus bill includes several gaming changes, the suggested ban on prediction market partnerships is one of the most discussed measures.
HB 904 originally would have prohibited all Kentucky-licensed racetracks, sportsbooks, and fantasy sports operators from either operating or affiliating with a federally regulated exchange that offers event contracts anywhere in the U.S. In effect, that would have invalidated the current Kentucky licenses of FanDuel, DraftKings, and Fanatics, all of which offer event contracts in numerous states outside of Kentucky, and would have prevented the likes of PrizePicks and Underdog from obtaining a DFS license for the same reason.
A committee substitute pulled back on that idea by limiting the ban to prediction market activity within Kentucky only, which ostensibly will allow all the companies listed above to offer regulated gaming in Kentucky as long as they do not also offer event contracts in the state. FanDuel, DraftKings, and Fanatics warned during the committee discussion of the bill that the original wider proposal would have forced their exit from the state’s regulated wagering market.
Meanwhile, some legislators expressed grave concerns over the negative effects such a ban could potentially have on Churchill Downs and the Kentucky Derby.
