Kentucky Emerges as Online Poker Possibility in 2019
Will online poker play a part in resolving the ever-deepening pension crisis in the Commonwealth of Kentucky? It may be an unlikely solution, but it is a part of the latest proposal from the state’s attorney general, who strongly urged lawmakers to consider it.
The sudden push to consider the legalization of sports betting is one thing for Kentucky, but to consider other games like online poker is quite another. Many will remember former Kentucky Governor Steve Beshear’s move in 2008 to seize more than 140 domains related to internet gaming, a move that was challenged in court and continues to be a thorn in the side of several gaming operators. The attorney general now pushing for Kentucky to legalize some of those same games is that former governor’s son, Andy Beshear.
Irony aside, it is a unique situation, as financial needs often make for strange bedfellows.
Bloomberg recently reported that Kentucky had the highest public pension funding gap of any of the 50 states, pressure mounted for the state to take action. The funding ratio of 33.9% to pension liability of $64.9 billion in 2017 was extreme.
State Attorney General Andy Beshear filed a lawsuit earlier in 2018 against a pension reform law that went into effect in April. Instead of keeping the state’s teachers in the Kentucky Teachers’ Retirement System, new hires would be referred to a cash balance-based plan, and Beshear took issue in court. A Franklin Circuit Court judge agreed with Beshear, and the case is now in the hands of the Kentucky Supreme Court.
Meanwhile, the state needs money. Desperate times call for desperate measures, and Kentucky is making that call.
As attorney general, I've pushed real solutions for our state's greatest challenges. Yesterday, I proposed a solution that would create a dedicated revenue stream for our pension systems without raising anyone's taxes. https://t.co/BeaIznt0OE via @courierjournal
— Andy Beshear (@AndyBeshearKY) November 27, 2018
Kentucky is known for its horse racing industry, and people come from miles around to place their bets. But those with other gambling desires, whether sports betting or casino gaming, go where those forms of entertainment are offered. And Kentucky residents go there, too. In fact, they spend an estimated $1 billion of their entertainment dollars in those other states.
Beshear has decided that an expanded gambling market in Kentucky would be a good move, especially if it helps resolve the state’s pension woes.
While in office, I’ve got a record for solving problems. A solution for the promised pensions of our teachers, first responders and public servants should be no different. https://t.co/2Lkx2Jk9Yg
— Andy Beshear (@AndyBeshearKY) December 1, 2018
In a letter to state legislators dated November 26, Beshear explained:
“The solution is not to cut legally promised benefits, but to create a new and dedicated stream of revenue solely for pensions that does not raise any Kentuckian’s taxes. The answer is simple – expanded gaming including casino, fantasy sports, and sports gaming, as well as preparing for the eventual legalization of online poker.”
Beshear went on to reference the US Supreme Court decision in May that overturned PASPA and has led to numerous states legalizing sports betting. “We are missing out on our share of these revenues,” Beshear wrote. “We cannot afford to continue to make this mistake.”
Finally, he stated his request more plainly:
“The General Assembly should pass legislation to allow expanded gaming, but dedicate all of the revenue to Kentucky pension systems until those systems are fully funded.” And he continued, “It is time. I ask that you pass the legislation of expanded gaming and sports betting for the benefit of our pension systems.”
Some lawmakers are on board with the plan, but they will face opposition. One of the most prominent opponents is Governor Matt Bevin. His chief of staff, Blake Brickman, issued a statement about Beshear’s plan, noting, “Expanded gaming is a tired tenet of the Democratic Party, so it’s no surprise that candidate Beshear is using his official office to call for a policy which is also conveniently part of his campaign platform.”
Brickman alluded to the campaign, which involves Beshear running for the position of governor in 2019.
As a Kentuckian, I am encouraged that less than 10 years after Gov. Beshear tried to seize domain names and sue online poker that most of these lawmakers are sharp, well-versed, and generally in favor of gaming, especially Rep. Koenig from Covington
— Jessica Welman (@jesswelman) October 12, 2018
Oh, How Times Change
It was only one decade ago that Andy Beshear’s father, Steve Beshear, took a significant stand against online gambling from his governor’s chair.
Not long after the Unlawful Internet Gambling Enforcement Act of 2006 went into effect, then-Governor Beshear ordered 141 online gaming-related domains seized by the Commonwealth of Kentucky in September 2008. The domains included a wide range of gaming sites, from Bodog to PokerStars and Full Tilt Poker.
Beshear obtained the authorization of a Franklin County Circuit Court judge for the seizures, and he justified the move because he felt that online gambling was part of the “underworld” and operators “leeches on our communities.” He noted, “The owners and operators of these illegal sites prey on Kentucky citizens, including our youth, and deprive the Commonwealth of millions of dollars in revenue.”
Internet rights groups from around the country voiced objections and accused the state of censorship. Those organizations, like the American Civil Liberties Union (ACLU) and Electronic Frontier Foundation (EFF), stepped in to file briefs with the court in support of operators who fought the case. They did obtain stays on the order, but it took years to roll through the court system.
— Rich Muny (@RichMuny) July 21, 2012
In the summer of 2013, Beshear announced a settlement with PokerStars and Full Tilt, which agreed to pay nearly $6.2 million to Kentucky. However, parts of the case continued in court on various grounds. In December 2015, a state judge ruled that Amaya, then-owner of PokerStars, must pay $870 million in penalties to the Commonwealth of Kentucky to cover the losses faced by Kentuckians who played real-money online poker on the site between 2006 and 2011.
— Card Player (@CardPlayerMedia) December 24, 2015
Ultimately, the case left a bad taste in the mouths of online poker fans, players, and operators.
That makes the request by Andy Beshear so ironic and interesting.
The coming months will reveal if Kentucky lawmakers are ready to embrace Beshear’s vision of gambling expansion and expand some of the very forms of gambling that his father deemed evil.