How Did Year 1 of Kentucky Sports Betting Compare to Other States?

The first full year of Kentucky sports betting is the books. How did The Bluegrass State fare relative to other sports betting launches in the United States? That is what we are here to find out.

First, a note: Though sports betting in Kentucky celebrated its one year anniversary in September, the full 12 months’ world of financial figures were just recently released. These reports typically run six to 10 weeks behind the actual timeline. That is why we have waited until now to dig into nuts and bolts of Kentucky sports betting revenue in Year 1.

Well, the data is here now. And there is plenty to take away from it.

Kentucky Sports Betting Revenue Clears Quarter of a Billion Dollars in Year 1

As he previously covered, the Kentucky sports betting handle cleared $2 billion long before reaching the one year anniversary. By the time a full 12 months passed, the handle wound up at around $2.7 billion, according to revenue tracking at Legal Sports Report. 

This is a massive number. And it exceeds expectations set by experts and analysts ahead of sports betting legalization in Kentucky. 

Of course, this does not mean The Bluegrass State turned a profit north of $2.7 billion. Sports betting handles do not speak to actual revenue. These figures represent how much money in total wagers the state received. When you factor in promotions and online sportsbooks having to pay out winning bets, the total revenue is much lower.

To that end, sportsbooks in Kentucky reported a combined profit of $311.7 million. That is…still a hefty chunk of change. And it means the state raked in a pretty penny itself.

How Much Money Did Kentucky Actually Make Off Sports Betting Taxes?

Kentucky sportsbooks must pay taxes on their profits. Breaks can be given for bonuses and promotions they run, but for the most part, The Bluegrass State assesses flat fees to operators. 

For 2024, they charged online sportsbooks in Kentucky a 14.25 percent tax. Retail locations, meanwhile, pay a 9.75 percent tax. 

The higher tax rate for mobile betting sites in the USA is by design. They essentially pay a fee for operating outside the state. Policymakers prioritize funneling money back into the local economy from sports betting. Online sportsbooks are usually headquartered outside the state, so they are not creating jobs or spending money in the region beyond advertising investments.

Going this route makes even more sense nowaday. The vast majority of sports betting in the United States now takes place online. Kentucky’s business model is no different. More than 90 percent of their sports betting handle originated with online sportsbooks. Naturally, mobile betting sites turned a majority of the profits. And this means Kentucky was able to tax a larger amount at a higher clip.

So how much revenue for the state did Kentucky sports betting generate? Between reported gaming profits from online betting sites and retail locations, it turns out that Kentucky has raked in almost $43.2 million.

This yet again exceeds the initial forecasts. Many projected that The Bluegrass State would make less than half of that in Year 1. Kentucky clearly blew those expectations out of the water. Does that also mean they had a standout sports betting launch relative to the rest of the country?

Putting the First Year of Kentucky Sports Betting into Proper Perspective

Comparing the Year 1 sports betting results for Kentucky requires the right context.

For instance, their revenue pales in contrast to New York sports betting revenue from Year 1. And that is all about market size. The Empire State has more professional sports teams and, above all, a much larger population. 

The latter is most important when figuring out how to contextualize Kentucky’s performance. They have a population of around 4.53 million people, which ranks 26th in the United States, according to StatsAmerica.org. Interestingly, a handful of the states with the most similar populations do not have legal sports betting. That increases the challenge here. 

As things stand, sports betting in Louisiana and sports betting in Colorado loom as the most intriguing. Both have a larger population than Kentucky. Louisiana ranks 25th at 4.57 million people while Colardo checks in at 21st with 5.88 million people. We like the Colorado analog, in particular, because they have an extra 1 million people in their market—not to mention more sports teams. If Kentucky is keeping pace with them, then they are clearly in good shape.

And, well, Kentucky sports betting is clearly in great shape. Here are the annual sports betting tax revenues for both states over the past 12 months:

• Kentucky Sports Betting Tax Revenue: $43.2 million
• Colorado Sports Betting Tax Revenue: $32.4 million

This is borderline staggering. Sure, there could be some Year 1 heightened interest at play for Kentucky. But Colorado is a bigger market with a more established wagering infrastructure. For The Bluegrass State to be competing with it is a big deal.

Granted, the question now becomes: Will Kentucky continue to outperform bigger markets? Or is this just a first year blip? The answer will come gradually, over the coming 12 months.

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: