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Pension Funds

Kentucky AG urges lawmakers to expand gambling to boost pension funds

Kentucky Attorney General Andy Beshear is urging lawmakers to legalize expanded gambling — such as casinos, sports gaming and eventually online poker — as a dedicated revenue source for the state's underfunded pension plans.

"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," Mr. Beshear wrote in a letter this week to state legislators.

"The answer is simple — expanded gaming including casinos, fantasy sports and sports gaming, as well as preparing for the eventual legalization of online poker," his letter continued.

Kentucky was the state with the largest public pension funding gap, with a funding ratio of 33.9% and total pension liability of $64.9 billion in fiscal 2017, a Bloomberg analysis published last month found.

In April, a Franklin Circuit Court judge ruled that a lawsuit Mr. Beshear filed against a pension reform law could move forward. His lawsuit is before the Kentucky Supreme Court, according to a release from Mr. Beshear's office.

The legislation, signed into law April 10 by Gov. Matt Bevin, included a provision that will put new teachers into a hybrid cash balance plan instead of the existing defined benefit plan overseen by the $18.1 billion Kentucky Teachers' Retirement System, Frankfort.

Mr. Beshear, who is running for governor in the state's 2019 election, said in the letter than Kentuckians now spend more than $1 billion in casinos in neighboring states that have legalized casino gambling, and that tax revenues from gaming in these states has reached more than $2.4 billion per year.

"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," Mr. Beshear wrote.

Mr. Beshear's office could not immediately be reached for comment.

Blake Brickman, chief of staff for Mr. Bevin, said in an emailed statement that "funding alone will not solve the problem" facing Kentucky's pension plans.

"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," Mr. Brickman wrote. "Gov. Bevin is the only governor to commit to fixing the pension crisis by fully funding the system and calling for necessary reforms to ensure that Kentucky can deliver on the promises made to retirees and current state workers."