Kentucky is About to be Surrounded by States with Legal Sports Betting

The absence of sports betting in Kentucky is about to become a whole lot more conspicuous. Heck, knowing how much people already invest in online Kentucky Derby betting both legally and illegally, its absence was already glaring. How could a state that directly benefits from one of the flagship sports betting events in the country not, you know, approve of sports betting? But if you think this is bizarre, things are about to get even stranger. Because as of January 1, Kentucky will be completely enveloped by states with legal sports betting.

No, this is not hyperbolic phrasing at work. It's simply the truth.

Beginning in 2023, Kentucky will be surrounded, at every turn, by a neighboring state that offers legal sports betting.

Might this convince the Bluegrass State to finally join the ranks of places that allow their residents to gamble on sports? Why has Kentucky remained so stubborn in their stance against legal sports betting as other states rush to join the fray? How much money does this bastion of horse racing stand to make if they change their tune? And equally important: How much money do they stand to lose now that residents have so many viable workarounds?

Kentucky has yet to provide us concrete answers to these pressing questions. Luckily, we went out and found them ourselves.

Ohio Legal Sports Betting Puts Kentucky in an Unenviable Position

Starting January 1, Ohio will roll out their system of legal sports betting. For those keeping score at home, that means all six states that border Kentucky now offer legalized gambling. Tennessee, Virginia, West Virginia, Indiana and Illinois all joined the fold ahead of the Buckeye State.

This would be a huge deal no matter what. But it's an even bigger deal knowing that all six states have embraced every form of legal sports betting. Residents in Tennessee, Virginia, West Virginia, Indiana, Illinois and now Ohio all have the ability to bet on sports in-person and via mobile sports betting apps and websites.

Frankly, this isn't a great look for Kentucky. Their restrictions on legal sports betting were already hard to understand at best. Refusing to approve it hasn't actually stopped it. People in Kentucky have always had the ability to use one of the sites that appear in our reviews of the top online sportsbooks, and this says nothing of the residents who just flat-out flocked to illegal bookmakers.

Now, Kentucky will see even more business funneled outside the state. With all six of their neighbors now offering legal sports betting, pretty much anyone who lives inside Kentucky will be close enough to a casino and sportsbook that they can drive across state lines to place their bets. 

How Much Tax Revenue is Kentucky Leaving on the Table?

Naturally, not everyone will see this as a huge issue. "How much money is Kentucky really leaving on the table?" has become a common refrain. It is also a flawed one.

For starters, Kentucky is actually leaving a bunch of money on the table. Back in 2020, when the push for legal sports betting first gained serious traction in the Bluegrass State, representative Adam Koenig estimated that Kentucky stood to make nearly $23 million per year in tax revenue. Nearly three years later, that estimate has likely only increased.

Granted, in comparison to bigger markets like New York, New Jersey, California, et al., we're not talking about turning the biggest profit around. But states need to think about the long haul. Kentucky stands to rake in over a quarter-billion dollars in additional revenue over the next decade; that is, without question, impactful money. Invariably, this begs the question: What's going on here?

Why Has Kentucky Refused to Embrace Legal Sports Betting?

In the interest of fairness, Kentucky as a whole is not entirely against legal sports betting. The House of Representatives actually approved a bill this past spring that would have put legal sports betting to a vote on the November 2022 ballot.

Initially, there was even hope the bill would make it through the Senate in time for ballot approval. That optimism, however, proved to be mistaken. The Senate barely addressed the matter at the latest legislature sessions due in large part to a presumed lack of support.

This dearth of support at the top of local government is tough to understand. Arguments against legal sports betting tend to focus on the overestimation of profits. For instance, the executive director of the Kentucky Center for Economic Policy, Jason Bailey, has long maintained the state stands to make under $11 million per year off sports betting legalization, according to the Courier Journal. That amounts to less than half of the projections given by Rep. Koenig.

Let's assume this pessimistic outlook is true. Our conclusion: So what? Getting an extra $11 million or so per year by allowing business that's already taking place either illegally, abroad or in neighboring states is a pretty sweet windfall. It's akin to getting an additional millions of dollars for not doing anything. And again, this assumes the lower projections are more accurate. The higher estimates could be spot-on. Or the actual profits could lie somewhere in the middle.

Either way, it doesn't matter. With Kentucky now literally surrounded by states offering legal sports betting, it's time for them to reassess their own gambling policies.

Take a look at this list of the top online sportsbooks so you can decide which one to use for all of your sports betting needs: