Sports Wagering Excise Tax FAQs

Effective June 29, 2023, House Bill 551 imposes a 9.75% excise tax on the adjusted gross revenue on wagers placed at the licensed track and a 14.25% excise tax on the adjusted gross revenue on wagers placed online via websites, mobile applications, or other off-site technology approved by the Kentucky Horse Racing Commission (KHRC).

The new statutory language is provided in KRS 138.552.​

​A: Sports wagering operator licensees (i.e., licensed tracks) authorized by the KHRC are required to report and remit the new sports wagering excise tax. Wagers placed through licensed service providers must be reported to the Department of Revenue (DOR) by the partnering track.    ​

​A: The sports wagering excise tax is due monthly on or before the 20th day of the next succeeding calendar month from when the reportable wagers occur. Licensed Kentucky racetracks and their satellite facilities with operator licenses began in-person sports wagering on September 7, 2023. Licensed service providers operating mobile sports wagering applications began taking sports wagers on September 28, 2023. Therefore, the first monthly reporting period, September 2023, is due October 20th.​

​A: The sports wagering excise tax is filed and paid electronically to the DOR through the Sports Wagering Tax Application.​

​A: Adjusted gross revenue is “the total sum of wagers collected on all sporting events, less winnings paid to participants in the contest and all excise taxes paid pursuant to federal law."​

​A: If adjusted gross revenue for a month is a negative number, the negative amount will carry over as a credit to the return filed for the subsequent month. However, the credit amount shall not be carried over in any period more than twelve (12) months after the month in which the amount carried over was originally due. The sports wagering tax application will automatically prepopulate any remaining credits from prior period returns.​

​A: Wagers should be reported on the monthly return after they are settled and realized by the licensee (i.e., wagers are not realized until the payout of winnings are settled).​

​A: Yes. A wager is defined in 809 KAR 10:001 and 809 KAR 10:001E as “a sum of money or representation of value that is risked on an occurrence for which the outcome is uncertain." Promotional wagers, “free bets," credits, and the like constitute wagers and should be included in the total sum of wagers calculation.​

​A: No. Winnings are defined in 809 KAR 10:001 and 809 KAR 10:001E as “the total cash value of all property or sums, such as the currency or instruments of monetary value paid to a patron by a licensee as a direct result of a winning Sports Wager." Anything that does not have a cash value or is not paid to the patron as the direct result of a winning wager (such as a free bet refund) cannot be included in the “winnings paid" calculation. ​

​A: Yes. The total cash value of property or sums paid to a patron following an early cash out or wager buy back may be included in the “winnings paid" calculation.​