2021 Tennessee Sports Betting Year In Review

The last 12 months have been transformational for Tennessee sports betting. The state saw legal sports wagering launch in November 2020, and the industry has grown considerably since. 

One operator of sports betting in the Volunteer State also saw controversy in 2021. The state lottery, meanwhile, has been preparing to pass off regulatory duties to the Sports Wagering Advisory Council (SWAC). All things considered, it was a busy year. 

Nov. 1, 2020: Sports betting launches

While this didn’t take place in 2021, it’s worth including in the timeline. Tennessee sports betting launched just over a year ago, when major sportsbooks BetMGM, FanDuel and DraftKings all accepted mobile sports bets. The state is unusual in that it has no retail sportsbooks and allows only the digital wagering. Tennessee Action 24/7, which operates in no other states, also launched on Nov. 1. 

Sports wagering became legal in Tennessee in July of 2019, and mobile betting launched over a year later. 

January: Additional sportsbooks OK’d

In January, the Tennessee Education Lottery (TEL) gave the go-ahead for William Hill (now Caesars), WynnBET, and TwinSpires to operate within the state once ready to launch.

January: Controversy with Action 24/7

In early January, the TEL approved a lender of high-risk “flex loans,” Advance Financial Money Transmission Co., to also serve as a store where customers could deposit gambling funds into the company’s sportsbook, TN Action 24/7. 

“It feels a little bit awkward that somebody could so easily use borrowed money to put money into a sports wagering account,” said TEL board and sports wagering committee member Will Carver, a partner at the law firm Kramer Rayson LLP in Knoxville. 

Despite Carver’s comment and slight uneasiness, Advance Financial was granted approval to operate within over 100 storefront locations. That allowed the company to facilitate the deposit and withdrawal of funds into TN Action 24/7 sportsbook accounts. Tina Hodges served both as the CEO of Advance Financial and president of the licensed sportsbook, causing some concern about the close interactions between the two businesses. 

February: Legislation targets Action 24/7

House Bill 824, introduced by Democratic Rep. Darren Jernigan, aimed to stop “a licensee that offers interactive sports wagering from allowing a person to place a bet or wager at the same location as where the person entered into a flex loan plan, a title pledge agreement, a deferred presentment services agreement, or a check cashing transaction.”

Essentially, the law was created to prevent Action 24/7 from creating a cycle of debt for Tennessee gamblers

“This marriage between flex loans and gambling, they have one company able to loan you money at 279% interest, and another where people have the ability [to] put that into an account to wager money,” Jernigan said. “It is the literal, not hyperbole, the literal definition of loan sharking. Except the next day they don’t break your legs. You just get put into a cycle of debt that you can’t get out of and go bankrupt.”

The measure did not come up for a vote by year’s end and remained in committee.

March: License suspended, quickly reinstated

In mid-March, TN Action 24/7’s mobile sports betting license was suspended. Regulators determined that the sportsbook fell short of the mandated Minimum Internal Control Standards (MICS) to prevent fraudulent betting activity. The TEL shared that there had been “aggravated identity theft” on the platform. 

A few days later, the sportsbook sued to have its license reinstated. A court in Nashville ruled shortly afterward in favor of Action 24/7, as the TEL didn’t follow proper procedure. 

March/April: Several sportsbooks launch

TwinSpires and Caesars launched in March, around the time of March Madness, joining BetMGM, DraftKings, FanDuel, and Action 24/7. WynnBET launched at the end of April.  

May: Action 24/7 resolves matter with TEL

Tennessee Action 24/7 told TN Bets in May that its compliance issue with the TEL was resolved. 

“We are pleased that this matter is coming to a close,” Tina Hodges, CEO of the sportsbook, said in a statement. “We appreciate our loyal players and friends across the state for their unwavering support. Tennessee is our home. We are proud to be the only locally owned and operated licensed sportsbook. We remain committed to working with the TEL Board and the Sports Wagering Council to maintain an environment of compliance and integrity for the Tennessee sports wagering community.”

May: SWAC  to become regulator

In May, it became apparent that Tennessee lawmakers were prepared to shift sports wagering regulator duties from the lottery to the Sports Wagering Advisory Council. The decision was essentially to switch the roles of each entity, making the SWAC the regulator and the TEL a sports betting advisor. The SWAC would be designated to take over regulatory duties at the beginning of 2022.  

September: Barstool begins operations

Penn National Gaming’s Barstool Sportsbook launched on Sept 8. 

October: Operators’ plea to end 10% hold

The SWAC wanted public comment on its proposed rules, and the group received plenty of backlash to the state’s 10% hold rule at the beginning of October. The rule, which was put in place originally by the TEL, requires sportsbook operators to “win” at least 10% from bettors as their gross revenue “hold” or face a penalty. The national average for hold is 7%, meaning that operators keep an average of $7 per $100 wager after the bettor is paid. Operators then pay taxes, employees, and other expenses from that. 

Operators, and even some consumers, dislike the 10% hold rule. A handful of critics voiced concerns via public comment, but the SWAC never seemed to give much thought to abolishing the 10% hold rule.

November: SWAC executive director named

Mary Beth Thomas took over as the SWAC’s executive director a year after sports betting launched in the state. She had a busy two months ahead of her, preparing for the council to become the state’s regulator on Jan. 1. 

December: Emergency rules approved

In early December, the SWAC agreed on a set of emergency rules for when it takes over as the regulator. The SWAC will work to implement a similar set of permanent rules early in 2022. The 10% hold rule remains for operators, although it’s possible the hold provision could be revisited in 2022. 

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