Kentucky is facing a cash crisis with its budget and state pension funds. The state is looking for new ways to bring in more income and sports betting appears to one of those markets that could help fix the cash shortage.
The state has to pay for the pensions of hundreds of thousands of public employees and is facing a massive shortage in cash. In hard numbers, the state currently has a pension debt of $33 billion. Added to that is $6 billion in retiree health plans. Calculations show that for Kentucky to come out of this hole, more than four million residents need to pay at least $15,000 to get the state out of debt.
That amount is staggering and legislators are already taking steps to ensure their constituents don't suffer for it. The latest solution comes from Julian Carrol, state senator and former state governor. He recently pre-filed a legal sports betting bill for the state.
WLKY News Louisville
The plan is for the revenue generated by sports betting to be divided equally between a specified trust fund and the state's racing commission. The racing commission will use its funds to perform integrity monitoring to ensure that all games in Kentucky remain clean of any tampering and that sports held in the state are not negatively affected by the sports betting industry. The money allocated to the trust fund will be used to pay for the Kentucky Teachers' Retirement System pension fund and the Kentucky Employees Retirement System Nonhazardous Retirement Fund.
In a statement, Senator Carrol said
Now that sports wagering is legal, it is abundantly clear we must protect the public and, fortunately, it will generate much-needed revenue for our public pensions and education system.
The state is expecting a significant amount of revenue to come in from legal sports betting. The bill filed by Carrol calls for a three percent excise tax on the sports betting handle which will mean that a 60 percent tax will be collected on sports betting revenue. The rate is the same to the current Kentucky standard for pari-mutuel wagering.
The state of Nevada has a 6.7 percent sports betting tax which helped bring in around $252 million in 2017. Using the same approach, Kentucky is expected to bring in around $144 million a year through its sports betting industry.
While the push to legalize sports betting in Kentucky is appreciated, sports betting firms are still up in arms. This is because they feel that the tax is too high as it would be combined with a one percent integrity tax. This makes the tax scenario way too high for them and would make profits rather marginal.
About The Author
