The potential of Kentucky’s newly enacted sports betting legislation will draw business away from neighboring states and provide fertile ground for the major operators that have a national presence, including Nevada-centric companies.
“Our initial estimates are for $250 million to $300 million in gross gaming revenue at maturity,” JMP Securities gaming analyst Jordan Bender told investors last week after Kentucky became the 37th state to legalize sports betting.
Gov. Andy Beshear wasted little time and signed the legislation into law less than 24 hours after passage. The market is required to be live within six months after the legislation becomes effective on June 28.
“For years I believed it was time for Kentucky to join so many other states and pass sports betting,” Beshear said during a press conference. “We talk about having a competitive business climate, but we did not have an important business that nearly every state surrounding us has. Our dollars were supporting Indiana, West Virginia, Ohio and other states.”
Bender said the two companies that will largely benefit from Kentucky’s legislation are FanDuel and DraftKings, which have long operated daily fantasy sports in the state. DraftKings opened a corporate headquarters in southwest Las Vegas last month and FanDuel, which is 5 percent owned by Boyd Gaming, has a branded sportsbook at the Fremont Hotel and Casino.
Kentucky’s new sports betting law allows the state’s nine racetracks and historical horse racing casinos to operate a retail sportsbook. The nine locations can also partner with as many as three online operators each. Conceivably, the state could be home to 27 online sports betting sites.
The law calls for tax rates of 9.75 percent for retail sportsbooks and 14.25 percent for mobile sports wagering.
Churchill Downs, which owns several historical horse racing casinos and racetracks, including its namesake track in Louisville, has deals in place with FanDuel and DraftKings. Bender predicted the two companies could control as much as 75 percent of the state’s sports betting market.
Nevada companies that operate in multiple states, such as BetMGM, Caesars Sportsbook, WynnBet and Circa Sports, will be attracted to Kentucky. The state joins Nebraska, Maine and Florida as states that have legalized sports betting but have yet to launch.