The Legalization of Kentucky Sports Betting May be Helping Horse Racing Industry

We already know the legalization of Kentucky sports betting has been a hit. But it might be an even bigger revenue-generator than the already-mounting expectations.

The early returns for sports betting in Kentucky have verged on incredible. Residents have flocked to both online sports betting sites and retail locations. The launch of Kentucky sports betting has even impacted neighboring states. Places like Indiana, Ohio, Illinois and West Virginia all border The Bluegrass State, all have legal sports betting and, most importantly, all used to benefit from the absence of sports betting in Kentucky. Residents of the latter would flock to surrounding locations to place their wagers. That revenue stream is now mostly gone for Kentucky’s neighbors.

Not coincidentally, Kentucky sports betting has already started to expand operations. The state wasted little time after the launch of legal gambling in September 2023 in adding more events to their sports betting portfolio.

Of course, the meteoric rise of legal Kentucky sports wagering was supposed to come with opportunity cost. As the market shifted more toward the use of online sportsbooks in the United States and betting on pro team sports, many worried that it would result in the gradual demise of horse racing interest and tracks.

To be fair, that concern may have been overstated. Horse racing is far less popular in the USA than it used to be. But it is ingrained into the fabric of The Bluegrass Kentucky. Interest in betting on the Kentucky Derby, for instance, will never suddenly disappear.

Still, the general concerns were valid. Residents now have more sports to bet on at their disposal. Given the decrease in horse-racing interest across the United States, it stands to reason a similar trend could now follow suit in Kentucky.

Except, well, it hasn’t. And not only that, but it appears the exact opposite effect is transpiring.

Licensing State Horse Racing Tracks for Kentucky Sports Betting Has Gone a Long Way

As part of the Kentucky sports betting launch last year, a number of race tracks were granted the licenses necessary to offer on-site wagering. That decision will seem like a no-brainer to many. It’s not.

On the contrary, attempts to license race tracks for sports betting operations have scuttled entire proposals in other states. The push for sports betting in Minnesota is the most prominent example. They have come close to approving a sports gambling initiative on at least two occasions, only for discussions to fall apart. Racetracks worry about their business model cratering once casinos and online websites can offer sports betting. They wanted licenses themselves. Minnesota tribes have so far refused to concede that ask. 

For Kentucky’s part, offering sports betting licenses to race tracks isn’t nearly as controversial. The Bluegrass State isn’t home to any tribal casinos. So, Kentucky’s race tracks didn’t face nearly the same amount of push-back from policymakers. 

Foot Traffic at Kentucky Race Tracks has Led to Increase Interest in Pari-Mutuel Wagering

Regardless, the success of on-site Kentucky sportsbooks at race tracks was never assured. The move was largely experimental. But as Frank Angst of Blood Horse recently wrote, the experiment is paying off in unforeseen ways:

“Based on the earliest of returns, the addition of brick-and-mortar sports wagering outlets at Kentucky race tracks may be spurring added interest in pari-mutuel wagering on horse racing…While in Kentucky there's no money from sports betting specifically set aside for racing, the brick-and-mortar sports wagering outlets are tied to the state's tracks. Racing executives hoped this approach would be an added attraction to bring people—specifically bettors—to the tracks. And once there, perhaps sports bettors would try their luck at racing.

“That trend appears to have started since sports betting in Kentucky launched in early September. On-track pari-mutuel handle on Thoroughbred racing for the combined months of September and October in Kentucky improved 3.9 percent to $21,523,763. That gain in on-track wagering at Churchill Downs and Keeneland is even more impressive when you consider that wagering on United States racing in September was down 5.87 percent and in October declined 9.34 percent.”

Upon first glance, a 3.9 percent increase in pari-mutuel wagering doesn’t seem like much. But like Angst noted, that uptick came amid a continued decline across the rest of the country. 

There is no overstating how important this development is to the Kentucky horse racing industry. It doesn’t just prove that sports wagering in Kentucky can work in harmony with on-site pari-mutuel gambling. It might just prove that one market can fortify the other.

All Eyes will be on Kentucky Sports Betting at Race Tracks in 2024 and 2025

The caveat to this good news? Kentucky sports betting remains novel. And for retail customers who have never tried their hand at pari-mutuel wagering, the same goes for horse racing. 

This initial boon in business is typical for new USA sports betting markets. States tend to have monstrous sports betting handles throughout the first year. Then, sometimes, they experience a pull-back as the practice becomes more commonplace. 

Technically, the same trend could impact both Kentucky sports betting and horse racing. It might not reveal itself immediately. Once more, Kentucky sports gambling remains relatively new. It’s only a couple of months old. The novelty shouldn’t wear off too much, if at all, during the 2024 calendar year.

As for the 2025 calendar year? That’s a different story. Kentucky sports betting will be over one year old in January 2025. That’s about the time when the state will settle into a normal flow of business. For many places, this isn’t a bad thing. Legal sports betting remains on the rise in a bunch of states across the USA one year removed from launching. The same break might apply to Kentucky. 

Race-track betting, specifically, is tougher to project. We are talking about circumstances and an initial trend specific only to The Bluegrass State. Even if the Kentucky sports betting market remains hot property, there’s no guarantee the increased business holds for pari-mutuel wagering. That doesn’t dilute the initial returns or optimism. It simply means the Kentucky sports betting and horse racing markets will be must-watches through 2025.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: