Home » Sports wagering experts detail keys to success and revenue estimates

Sports wagering experts detail keys to success and revenue estimates

By Jacqueline Pitts, The Bottom Line

After a decision by the United States Supreme Court in May opening the door for states to allow bets on sporting events, lawmakers are hearing from experts on sports wagering to learn what could be done in Kentucky ahead of the 2019 legislative session.

In a meeting of the Interim Joint Committee on Licensing, Occupations, and Administrative Regulations on Friday, Brendan Bussman, director of government affairs for gaming hospitality consulting group Global Market Advisors, was the first to present on the issue and stressed the importance of details involved in crafting legislation to legalize sports wagering.

Using the example of Nevada, Bussman explained state and federal taxes, operating costs, and other factors mean Nevada gets around two cents of every dollar that is spent on sports wagers. He said Nevada saw $5 billion in sports wagering activity in 2017 and $250 million in revenue.

As for Kentucky, Bussman said Global Market Advisors estimates Kentucky could see between $10.4 million to $104 million in revenue if sports wagering is legal in the commonwealth.

Bussman said tax rates are an important factor when it comes to legalizing sports betting and added low tax rates are good because it helps generate more activity and compete with and cut down on the illegal market.

Key considerations for legislation and registration would be looking at existing jurisdictions and models from other states, tax rates that will be implemented, understanding the market with factors such as feasibility and locations, and licensure, according to Bussman.

Tom Delacenserie, president and CEO of the Kentucky Lottery Corp., said items the legislature needs to consider include where wagering will be available — with horse racing tracks and other brick and mortar retailers as well as mobile/online as options, if there will be a license fee, what sports will be included, what tax rate and fees will be implemented, responsible gaming measures, and what entity will be charged with oversight of sports wagering.

Estimated sports gaming revenues for Kentucky according to the Kentucky Lottery Corp. come to anywhere between $6.7 million to $26 million based on multiple factors, Delacenserie said.

Charles Cohen, Vice President of Sports Betting for IGT PlayDigital, testified alongside Delacenserie and began his remarks by stating sports betting is complex activity and there are many ways to approach it.

Cohen laid out three different approaches for sports wagering that could be considered:

  • The single supplier approach would have effective oversight for the government but could limit economic potential as there would be no competition.
  • A fully open model would make the market a free for all that could be regulated but would be a costly and complicated expense, according to Cohen. This approach, however, would have the most revenue possibilities as it would allow the most activity.
  • The middle of the road option, Cohen said, would be the trusted participants model where a limited number of licenses would be gifted to trusted entities. He stated this would have the maximum revenue potential but wouldn’t be far off from the fully open model and would allow for efficient control over operations.

Cohen said keys to success for Kentucky will be balancing accessibility for players with social responsibility as well as a balance between safety and competition.

House Licensing and Occupations Chair Adam Koenig stated Kentucky already has three forms of legal gaming including charitable gaming, horse racing, and lottery and said all three are administered completely differently and some standardization could be part of legislation introduced in the 2019 session.

Brad Cummings, CEO of Kentucky company Equilottery Games, showed the legislature examples of what sports wagering could look like in Kentucky with tickets and estimated payouts for live sporting events and detailed what he feels are the benefits to Kentucky including promoting the state’s equine industry, expanding the lottery base, and more.

Mark Brenner, president of the Poker Alliance, stressed there is already a robust gaming system in Kentucky, much of which is illegal and unregulated. Brenner asked that in this conversation, legislators also consider giving the same opportunity to play poker online.

Watch an interview with House Licensing and Occupations Chair Koenig on sports wagering on The Bottom Line here.