Online Kentucky sports betting launched Thursday morning, ending the three-week head start racetracks had with in-person betting, which kicked off with the NFL season on September 7.
According to a recent release from Gov. Andy Beshear, racetracks accepted $4.5 million in sports bets statewide in the first two weeks of in-person betting.
Mobile betting will be far more popular than in-person wagering, with online betting accounting for 94% of all US sports betting volume in 2023. However, Kentucky sports betting licenses run through horse tracks, so the state’s signature industry still stands to benefit.
LSR projects that Kentucky sportsbooks will generate close to $1 billion of handle and $100 million of revenue through the rest of 2023.
Kentucky sports betting agreements
Some states require online operators to be ‘tethered’ to a land-based gambling enterprise. New Jersey sports betting is a long-standing example of this structure, with online licenses facilitated through a casino or racetrack.
Licensing through brick-and-mortar facilities typically involves an upfront fee, an annual fee, and a revenue-sharing agreement.
An industry source told LSR the upfront and annual fees can be anywhere from $50,000 to $1 million or more, depending on the market.
The revenue-sharing deals generally involve net revenue totals, allowing for tax and other deductions. The online operator then sends a cut of monthly proceeds to the retail licensee.
Support for Kentucky horse racing industry
In the case of Kentucky sports betting, the racetracks will collect the fees and receive a share of revenue from their online partner.
Sports betting will certainly provide more competition for gambling dollars, though racetracks are recognizable and trustworthy names for Kentuckians.
Jim Goodman, director of wagering development at Keeneland, believes the horse racing industry will benefit from Kentucky’s licensing arrangement rather than if the legislature opened the market for an outside sportsbook to operate without a racetrack partnership.
“When you talk about legislation to expand gaming in Kentucky, the horse racing industry always has a place at the table, and rightfully so,” Goodman recently told LSR. “I would hate to be in a state where horse racing is not at the forefront for the legislature.”
NJ sports betting ‘lifeline’ to horse racing
In New Jersey, sports betting legislation combined up to three online sportsbooks under a single operating license. An Atlantic City casino or a racetrack holds the license in New Jersey, much like the tracks do in Kentucky.
A portion of the fees and revenue from online operators helps fund race purses in New Jersey. The remainder is an extra revenue stream for tracks to use how they see fit.
Bill Knauf, vice president of business operations at Monmouth Park, told LSR that the relationship between sports betting, horse racing, and casinos in New Jersey is necessary.
“It was a lifeline. Kentucky has historical horse racing, which is an extreme revenue source for them. We do not have that in New Jersey, so sports betting kept us in business,” Knauf said.
Historical horse racing in Kentucky
Between June 2022 and July 2023, historical horse racing provided $123 million in tax revenue for the Bluegrass State.
According to figures from the Kentucky Horse Racing Commission, total handle for the fiscal year surpassed $8.2 billion.
Kentucky sports betting apps
Kentucky state law authorizes sports betting licenses for the nine horse racing tracks in the state. Each track can partner with up to three online brands, creating the potential for up to 27 sports betting apps in Kentucky.
With their racetrack partner, seven online operators will go live on Thursday.
|Online sportsbook||Racetrack partner|
|Barstool Sportsbook||Ellis Park Racing & Gaming|
|Bet365||Sandy’s Racing & Gaming|
|BetMGM||Sandy’s Racing & Gaming|
|Caesars Sportsbook||Red Mile Racing|
|DraftKings Sportsbook||Cumberland Run|
|Fanatics Sportsbook||Oak Grove Racing, Gaming & Hotel|
|FanDuel Sportsbook||Churchill Downs|
Penn Entertainment is rebranding Barstool Sportsbook to ESPN Bet in November.
An eighth operator, Circa Sportsbook, is partnered with Cumberland Run and will launch later this year.