Kentucky's Gaming Enforcement Agency Breaking Social Contract

Mere weeks before the start of sports gambling's second-biggest event, NCAA's March Madness, the Kentucky Horse Racing and Gaming Corporation (KHRGC) is making staffing changes to its enforcement division.

According to reports, the KHRGC downsized its enforcement division, before posting job offers for a compliance coordinator, compliance analyst, data analyst, and licensing and administration coordinator. Per the KHRGC's staffing directory, it has four enforcement investigators and one gaming compliance officer overseeing an industry with a $2.6 billion handle in 2024. No reason was given for the shake-up in the state's gaming enforcement division. 

For comparison, Iowa had $2.7 billion in handle last year and has 57 special agents assigned to the Special Enforcement Operations Bureau. Neighboring states like Ohio and Indiana have over 100 gaming enforcement staff.

Thanks to the popularity of the March Madness tournament, hordes of Kentuckians flood to sports books to wager on college basketball. Kentucky saw $256 million bet on sports in March 2024, its third-biggest month of the year after October ($273 million) and November ($301 million). The lack of enforcement leaves Kentucky consumers vulnerable to the whims of operators who will effectively have to regulate themselves in the Bluegrass State.

Broken Social Contract

Sports gambling has only been legal in the US since 2018, and since then state after state has debated allowing a formerly illegal practice. So far 39 states - as well as D.C. and Puerto Rico - have opened their doors to sports gambling. Part of the agreement to allow sports gambling is that states would regulate the industry to protect its constituents. 

But look, you can't have regulation without enforcement. What good is a law if there's no one to make sure that law is respected? 

How would consumers in New Jersey have received compensation after bet365 was found to have altered odds if not for the New Jersey Division of Gaming Enforcement? In Connecticut, DraftKings was fined $22,500 after enforcement agents found that one of their slot games failed to pay out after 20,600 spins, even though the game was advertised to pay out nearly 95 cents for every dollar wagered.

By not staffing their enforcement division sufficiently Kentucky is leaving its citizens exposed to possible predatory promotions and bad actors. Kentucky has all but broken the social contract it had "signed" when it legalized sports gambling.