Kentucky Sports Betting Achieves Record-Setting First-Year Revenue

Kentucky saw significant success, with total wagers amounting to $2.3 billion and generating $37 million in tax revenue for the state, according to the Kentucky Horse Racing Commission (KHRC). This figure greatly sured earlier projections made in Frankfort, which had initially forecasted a more conservative $23 million in tax revenue for the state’s inaugural year of sports betting. The unexpected boost came from a healthy $285 million in gross gaming revenue, taxed at a rate of 14.25%, which helped Kentucky outpace expectations by more than 60%.

Throughout the year, the major online betting platforms dominated Kentucky’s sports wagering market. DraftKings emerged as the leader in handle, processing $895 million in bets, while FanDuel closely followed with $817 million. However, in a recurring trend seen in other states, FanDuel led the market in revenue, generating approximately $106 million compared to DraftKings’ $100.8 million. Both companies showed remarkable returns, reinforcing their roles as leaders in the state’s sports betting industry.

Kentucky’s Expanding Operator Landscape

The report further outlined that other operators, including bet365, BetMGM, Caesars, and ESPN Bet, also contributed significantly to Kentucky’s handle and revenue. In the first year, bet365 ranked third in of betting handle, with $157 million in wagers, followed by BetMGM at $144 million, Caesars at $118 million, and ESPN Bet at $104 million. Fanatics, which entered the Kentucky market slightly later than its counterparts, recorded a handle of $52 million, while Circa, launching in May 2024, ed for $4.3 million in total wagers.

Despite ranking fourth in of handle, BetMGM performed strongly in revenue, generating nearly $19 million in gross gaming revenue and securing the third-highest revenue position among the operators. Bet365, although a leading performer in total handle, ranked just below BetMGM with approximately $13.5 million in revenue. Analysts suggest that bet365’s aggressive promotional strategy in Kentucky, which mirrored its substantial spending in neighboring Ohio, likely bolstered its position and helped it stand out in a competitive landscape.

Retail Sports Betting Contributes to Kentucky’s Success

In addition to online betting, retail sportsbooks in Kentucky played an instrumental role in generating revenue. Combined, retail sportsbooks recorded $87 million in handle, contributing $7.8 million in gross gaming revenue and $756,000 in tax revenue. Among Kentucky’s retail sports betting operators, Churchill Downs, powered by its Kambi platform, emerged as the frontrunner, processing $35 million in wagers. Red Mile’s Caesars Sportsbook followed closely behind with $22.3 million in handle, and Kambi’s operation at Turfway Park added another $14.7 million in wagers, securing its position as the third-leading retail sportsbook.

Kentucky’s tax structure for sports betting operates at a competitive rate, with a 14.25% tax on online wagering and a 9.75% rate on retail wagers. This structure, combined with high engagement from both local residents and the operational success of major sportsbook platforms, enabled Kentucky’s revenue figures to climb higher than those seen in several other states during their first year of legalization.

The impressive results from Kentucky’s first-year position favorably compared to other states with similar population sizes. For instance, Oregon, which launched its legal sports betting market in October 2019, recorded only $2.9 million in revenue off $45.3 million in handle during its initial year, highlighting Kentucky’s strong market entry by comparison. Meanwhile, Colorado, despite a larger population, generated $66 million in revenue in its first year, with a handle close to Kentucky’s at $2.34 billion, yet remained substantially lower in total revenue.

These figures underscore Kentucky’s impressive entry into the legalized sports betting market, with a revenue-generating potential that exceeded projections and showed the state’s enthusiasm for this form of entertainment. Kentucky’s tax structure and the strong performance of its retail and online operators suggest that the state is well-positioned for continued growth in its sports betting sector in the years to come.

Source:

”Sports Wagering Report”, khrc.ky.gov.