The Kentucky Sports Betting Enforcement Team is Being Downsized in Advanced of March Madness

The Kentucky sports betting enforcement team is getting downsized in advance of the 2025 March Madness Tournament, the Kentucky Horse Racing and Gaming Commission recently announced.

Dan Monk of WCPO 9 first reported this news, which is generating wide-spread concern. While the launch of sports betting in Kentucky is so far a financial success, individuals tasked with its regulation have previously said they are noticeably understaffed. As Monk notes, the Kentucky sports betting regulatory arm had just one employee for every $2 billion wagered upon its debut.

This latest decision seems like it will exacerbate that concern. And immediately, the motive isn’t entirely clear.

The Number of People Regulating Kentucky Sports Betting is Lower Than You Think

According to Monk, at least three members of the Kentucky sports betting enforcement team were among those recently let go. He also reports that all of the original 10 employees from this division are now gone. Here are more details from Monk below:

“A month before March Madness, the Kentucky Horse Racing and Gaming Corporation has downsized its sports-betting enforcement team, as the seven-month-old enterprise reshapes how Kentucky regulates the gambling industry. The shakeup comes two years after critics complained Kentucky wasn’t adequately staffed to regulate sports betting and five months before the corporation is scheduled to add charitable gaming to the portfolio of gambling segments it oversees.

“[A] former state employees said all 10 people who worked for the agency when the first sports bets were placed on September 7, 2023, have since lost their jobs. The downsizing concluded with the firing of three enforcement employees on Feb. 11, said David Mcanally, one of those fired that day. The corporation’s website shows its gaming division now has three managers and one gaming compliance officer. The corporation declined to comment on the firings or explain how it plans to regulate the industry with fewer enforcement employees.”

This is a borderline wild development when you dig into the remaining staff. From the sound of things, a total of four employees now formally populate the Kentucky sports betting enforcement division. That number may be higher when you consider contracts with outside firms. But that lack of tangible employees is nothing if not notable.

This Downsizing Comes Despite Sports Betting Remaining a Growth Industry

Without any public comments off which to work, the logic behind this downsizing isn’t the least bit clear. Sure, everything typically comes back to dollars and cents. But it is objectively weird to trim a staff tied to a growing industry.

Business continues to boom in The Bluegrass State. The Kentucky sports betting handle is routinely setting records month over month. And in 2024, the state’s overall revenue climbed by a significant margin.

Though December’s numbers aren’t yet public, Kentucky sports betting is on track to generate $40-plus million in additional tax revenue for the calendar year. That number checked in around $15.5 million for 2023. Overall, this represents a 250 percent increase in Kentucky sports betting tax revenue.

Even if the Kentucky Horse Racing and Gaming Commission is bracing for a downtick next year, the value in downsizing doesn’t quite make sense now. Clearly, the industry isn’t operating at anything near a deficit. Gutting the regulatory staff for budgetary reasons rings hollow. Especially when, as Monk reports, the commission initially promised to increase the number of employees on staff. 

Beyond that, if they are going to downsize, you would expect them to wait for a slower period in the sports calendar. This decision comes after the apex of betting on the Super Bowl. But it is happening just before betting on the 2025 March Madness Tournament reaches its fever pitch. 

Concern is Mounting Among Industry Insiders in the Wake of This Downsizing

Many within the industry are wondering how big the fallout will be for the Kentucky sports betting market. After all, the Horse Racing and Gaming Commission cannot hope to be as effective at regulation with a fraction of its previous workforce. And if they are hoping as much, they have yet to explain why or how that’s possible.

As such, certain experts believe this decision will open the door for an increase in unaddressed issues. “Looking at this at the org chart and looking at the steps that have taken place over recent months with the downsizing of compliance, that suggests to me that a lot of the onus will be on the operators,” Ian Messenger, president of the Association of Certified Gaming Compliance Specialists in Toronto, tells Monk. “There will be a lot of trust from the regulator that the operators are doing what they should do. But by doing this, it does create those gaps that could lead to greater issues.”

Forecasting the specific issues this may create is an inexact science. Look around the rest of the country, though, and you may get an idea. 

States with a heavier regulatory presence, such as Massachusetts, are repeatedly issuing fines for various violations. These run the gamut from the offering of illegal events and posting lines on already-completed competitions to insider gambling and underage wagering. The Kentucky sports betting market already ranks on the lower end of violations issued. It will only get harder to stay on top of day-to-day compliance with a skeleton crew department.

Some are speculating this move constitutes a transition. In their view, the departed employees will soon be replaced by new ones. Perhaps this ends up being the case. But for now, given how small the Kentucky sports betting team was to begin with, skepticism is the most reasonable default.

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