The letter comes as House Bill 551 enters its penultimate day of sessions in the House of Representatives.
The letter, written by AGA CEO Bill Miller, emphasises how 36 states and Columbia have recognised the importance of regulated sports betting in terms of tax revenue.
It goes on to describe how six out of the seven states bordering Kentucky have already legalised sports betting, offering an easy opportunity for people to travel across states to wager.
The alternative for residents of Kentucky is to use offshore, illegal sportsbooks.
Miller says: “AGA research estimates that almost $64bn a year is bet with illegal sportsbooks.
“These illicit operators pay no taxes, lack any requirements to pay winning bettors, do not implement age verification requirements to protect minors, and offer no responsible gaming resources to identify and help those who need it.
“The legal, regulated industry is committed to doing all these things.”
According to GeoComply data, there were almost 300,000 geolocation checks performed in the state of Kentucky during the March Madness opening weekend.
While at the House of Representatives, House Bill 551 will need at least 23 votes from members to advance to the next stage.
Miller continues: “Kentucky has an important opportunity to join 36 other states in providing a legal, regulated sports betting market that will help fund critical initiatives and give your constituents what they want.”
The push for legalised sports betting in the state comes just ahead of the Kentucky Derby. DraftKings also hopes this event will support the launch of its DK Horse app.