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Kentucky

Kentucky isn’t a state that associates itself very strongly with gambling. And yet, in at least one corner of the industry, there is virtually nowhere else in the world that can be regarded as more important or historic. That’s because this may well be the heart of horse racing in America, a fact that has had a major impact on – and will likely continue to shape – the gaming industry in the Bluegrass State.

Historical Illicit Dens Give Way to Horse Racing

Once upon a time, Kentucky was the gambling capital of the United States. Of course, you have to go back a ways to find a time when that was true. In particular, the city of Newport was home to illegal operations run by organized crime starting in the 19th century, vestiges of which persisted throughout much of the 20th century as well. In particular, the prohibition of alcohol in 1919 turned Newport into a true “Sin City,” at least for a few decades.

But that began to change in the 1960s, and by the 1980s, the last remains of that history were gone from Newport. That left few gambling options for residents of the state, at least until November 1988, when voters overwhelmingly approved a state lottery. In 1989, the Kentucky Lottery began selling instant scratch games, and today, there are several drawings held each week. State residents are also free to take part in multi-state games like Mega Millions, Lucky for Life, and Powerball.

Of course, the most well-known aspect of gambling in the state is the horse racing industry, which has always been important to Kentucky. Churchill Downs is perhaps the most storied venue in the sport, first opening in 1875. While you couldn’t always gamble on the races there (at least not directly with the track), pari-mutuel betting has been available since the 1920s.

Churchill Downs is home to the Kentucky Derby, one of the Triple Crown races and probably the single biggest name in at least North American horse racing. It has also hosted some other major events over the years, such as the Breeders Cup. The racing industry is much bigger than one track here, though, with other major tracks like Ellis Park, Kentucky Downs, and Keeneland also playing host to major events and long seasons of racing at various levels.

There is one major gap in the local gaming landscape. At least for now, the state isn’t home to a single casino. In fact, even the racetracks are not allowed to offer slot machines or table games, meaning Kentuckians must travel to neighboring states such as Illinois or Indiana if they want to play casino games.

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Internet Gaming Available, In a Limited Sense

If you’ve casually paid attention to headlines about Internet casinos over the years, you’ve probably heard that Kentucky has been fairly hostile to the idea. This is largely true; strangely enough, however, there is some regulated online gambling in the state. Not surprisingly, the one type of virtual betting allowed here is on horse racing: you can place bets through approved vendors on their websites.

On the other hand, legislators have fiercely opposed regulated Internet casino gaming, leaving overseas sites as the only choice for players. Given how aggressively the state has tried to target even these operators at times, many companies simply choose to stay out of the state entirely, but others have soldiered on and continued to accept customers from here. And with no state laws criminalizing playing real money games over the Internet, many individuals enjoy signing up and playing at the sites that do operate here.

Still, it is understandable why some companies simply won’t do business here. In both 2008 and 2011, the state government filed lawsuits in an attempt to claim domain names from some major online gambling operators, saying that they were operating illegally, and that as such, the state could take the domains under their possession. At least one of those cases was later settled, with the state receiving over $6 million in compensation.

Future May Be Brighter Than It Seems

Such a strong stance may make it seem as though we will never allow for online gambling sites in Kentucky. But a deeper look into the issue reveals that there may be more hope that a quick glance suggests.

First, there is the fact that one of the state’s biggest players has already invested in their Internet operations. Churchill Downs has built up a sizable online platform, saying they want to be ready when and if various states – including Kentucky – set up regulations they can operate under. The company has also been pushing for expanded gaming here, including potentially allowing for machines and other games at racetracks; they have already invested in racinos in other states.

It’s also worth noting that even the relatively strong-armed tactics of the state government can be seen in a positive light. Attacking foreign operators that they believe are acting illegally is something they would also do in a regulated market, and that could potentially lead to a situation where regulators feel as though the state could handle a licensing program as well.

As always, it is the racing industry that is at the heart of the future of all forms of gambling here. State officials have said that their efforts against Internet operators were designed to protect the industry (along with charitable gaming interests), and so a form of online wagering that actively helps Churchill Downs and others might be able to find some traction with legislators. That’s how Internet betting on races was sold, and in the future, it could also be the path to allowing racinos and online casinos to exist as well.

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