Committee advances broad gaming bill: fantasy sports licensing, raises sports-wagering age, curbs prop bets on in-state college athletes

House Bill 904, presented to the House Licensing and Occupations Committee as a comprehensive rewrite affecting horse racing, sports wagering, fantasy sports and charitable gaming, advanced out of committee with a committee substitute.

Representative Michael Meredith, sponsor for the bill, told members HB 904 "has been worked on for months" and touches nearly every area overseen by the Kentucky Horse Racing and Gaming Commission. Meredith said the bill would create a licensing framework and a revenue mechanism for fantasy sports, raise the minimum wagering age for sports wagering from 18 to 21, and ban prop bets on in-state college athletes. "We would raise the age in sports wagering from the age of 18 to 21 to participate and we would ban prop bets on in-state college athletes," Meredith said.

On fantasy sports taxation, the sponsor said the committee settled on a 12% excise tax on adjusted gross revenue, paid by the operator rather than individual bettors. "That puts us somewhere in the middle of what the other states are doing," Meredith said. The committee also discussed existing sports-wagering tax rates described in the hearing as 9.75% for in-person/brick-and-mortar and 14.25% for online wagering.

Members raised industry concerns. Representative All referenced a letter from online sports-industry companies expressing worry the bill's language could affect their ability to operate in Kentucky; Meredith and Chairman Cook said ongoing conversations with industry are occurring and stressed regulators are attempting to balance market access with state recordkeeping and consumer protections. "The sub does not update any language in that," Meredith said of the committee substitute, and he added that he and Chairman Cook "have had and will continue to have ongoing discussions with that industry about the language." Representative All also pressed whether the age change applied to all wagering; the sponsor said the change from 18 to 21 is specific to sports wagering.

The bill addresses prediction markets, which sponsors said are often treated as derivative contracts under federal law and have been subject to federal preemption arguments. Meredith noted a recent federal court ruling in Ohio affecting prediction-market regulation and said states are watching how those cases proceed. The committee record shows language restricting certain licensee interactions with prediction-market companies and that a taxation approach for those companies appears in the revenue bill.

Chairman Cook detailed charitable-gaming provisions: the bill would create an interim task force to study charitable gaming, delay implementation of a chairperson provision for one year to allow interim work, raise the charitable wagering limit from $599 to $1,499 and seek to eliminate middlemen in charitable gaming to reduce bad actors. "The most important thing to know is that we are going to have a very comprehensive look at the rules and regulations regarding charitable gaming this summer," Chairman Cook said.

Other operational items in the bill include updates to tote-machine requirements so wagering information refreshes faster (sponsors cited slow tote updates as a problem) and a purse stabilization fund funded by wagering revenue. Members asked about constitutional risk regarding fixed-odds wagering; the sponsor argued that fixed-odds wagering is substantially similar to sports wagering and that existing sports-wagering law had not proven constitutionally vulnerable in recent years.

A committee substitute was adopted and the committee voted to pass HB 904 favorably with the subcommittee. The transcript shows multiple members voting yes or recording a pass during the roll call; Chairman Cook announced that "House Bill 904 passes favorably with the subcommittee." Sponsors said floor amendments are expected and that further conversations with stakeholders will continue before floor action.