Kentucky and Louisville officials marked the opening of the Churchill Downs Race and Sports Book on Thursday morning.
It coincided with the start of the new NFL season. Leaders including Governor Andy Beshear and Mayor Craig Greenberg placed some of the state’s first legal sports bets soon after the 10 a.m. launch.
“I bet on both [University of Louisville] and [University of Kentucky] to win their football games this [week]. Both of them are heavy favorites, but I know they've got amazing offenses,” Greenberg said.
Last month, the Kentucky Horse Racing Commission approved temporary sports betting licenses for 12 locations, including Churchill Downs and its two Derby City Gaming facilities in Louisville, and The Red Mile in Lexington.
The regulator also gave temporary licenses to nine sports betting providers, including FanDuel and DraftKings. Those can operate now at the retail locations, but online betting through their apps won’t start until later this month.
Gabe Prewitt, Red Mile’s vice president of racing and sports wagering operations, recently said he expects the three weeks when only in-person betting is allowed to be busy.
“I'm constantly trying to prepare our folks to really try and overstaff and let's overprepare, because you know, this is gonna be a little crazy here,” Prewitt said.
In March, Kentucky lawmakers narrowly passed a sports betting bill after years of failed attempts. Proponents of House Bill 551 argued it was crucial for competing with neighboring states that allowed wagering, and recent polling indicated Kentuckians’ support of legalization.
Under the law, 2.5% of sports betting tax revenues and licensing fees will go toward the new Kentucky Problem Gambling Assistance account, while the rest is earmarked for the state’s permanent pension fund.
Legislative researchers estimated sports wagering could bring in about $23 million in annual state revenue and fees.
Betting on the future
Louisville resident Tim Hudson was excited about sports wagering, accidentally showing up to Churchill Downs on Thursday earlier than its sportsbook opened to the public.
But he said he’s disappointed he can’t bet online yet, and thinks racetrack owners heavily benefited from the new law.
“Eventually, I feel like Derby City Gaming downtown will become a casino. And they just wanted to have their footprint in first,” Hudson said.
While traditional casinos aren’t allowed in Kentucky, Derby City Gaming and other facilities with slot-like historical horse racing machines are.
At The Red Mile, those machines are now next to a new Caesars Sportsbook area, expanding the venue’s entertainment options. Prewitt said he thinks sports wagering can attract younger patrons.
He also thinks people who come in to place sports bets are more likely to wager on horse races, too, than the people who use HHR machines.
“I think the crossover when you get to sports wagering and horse racing and poker, it's sort of someone who likes to think and understand and process data and information,” Prewitt said.
The addition of sports betting to The Red Mile’s portfolio will raise its profile in the surrounding community, Prewitt said. He said the venue’s popularity declined before it added HHR machines in 2015. Those contribute revenue to increase the horse racing prize money The Red Mile offers, which in turn attracts better race horses.
University of Louisville business professor Thomas Lambert, who studies gambling and the horse racing industry, said it’s possible sports wagering could have a negative impact on horse race betting.
“There's only so much money to go around in the short run. And so the risk is, you know, how fast is this new form of gambling going to grow? Will it take away money from the current forms?” Lambert said.
Lambert also described the $23 million state revenue and fee estimate as “cautious,” and said lawmakers had multiple reasons to approve sports wagering.
“I think the state has done the best it can to protect one of its, quote, signature industries... But also, they're trying to keep up with the times. They're trying to keep that money from bleeding over into other states,” Lambert said.
Lambert added he thinks Kentucky could outperform other states in per capita revenue from the NCAA Men’s Basketball Tournament, one of the country’s biggest annual sports betting events, if the University of Louisville and University of Kentucky qualify.
