Tennessee Sports Betting

Safe, legal and regulated sports betting is coming to Tennessee, thanks to a bill sponsored by Sen. Steve Dickerson and Rep. Rick Staples, which passed the state legislature in late April 2019.

But unlike other states which have legalized the industry, Tennessee sports wagering will be available only via smartphones, tablets, computers and other Internet connected devices.

The mobile/online-only sports betting bill is the first of its kind in the country, and will allow TN gamblers to place sports bets even though there are no casinos in the state. In that regard, the legislation is progressive, and could serve as a template for other casino-free states, such as Georgia, for example, to get in on the action.

So when will you be able to start plunking down bets on your favorite teams?

The law officially goes into effect on July 1, but specific regulations still need to be hashed out. Officials are hoping to get the industry up and running sometime during this year’s NFL season, which is an ambitious goal, considering the long delays other states have seen in their sports betting rollouts (looking at you Pennsylvania).

What’s in the bill

Here are the main points of the law broken down:

• Who can play: Anyone 21 years and up who is physically inside the state
• Betting locations: Via mobile and internet connected devices only
• Who will regulate: Tennessee Lottery Corporation
• Operator tax rate: 20%
• Annual licensing fee: $750,000
• Where the taxes go: Education, local government and gambling addiction treatment programs

Is this a good bill from a player perspective?

Yes and no. The full-fledged mobile-only aspect is definitely a plus, as bettors will be able to place wagers from anywhere within the state. This is clearly a number one priority for bettors, evidenced by the New Jersey market, where mobile wagering accounts for over 80% of handle. There is no in-person registration requirement in NJ, as there won’t be in Tennessee.

Also a plus, ten unique operators will be allowed to conduct sports betting operations, and none of them will need to partner up with an existing brick & mortar outlet. That will eliminate partnership costs, which can be substantial. It’s possible this cost saving measure will be reflected in more favorable lines and solid marketing initiatives, as operators scramble to get their brand name known.

Then again, the combination of a $750,000 annual licensing fee, an exorbitant 20% rate, and a mandate requiring operators to use league data — thus granting leagues discretion over pricing — could be severely damaging to operator bottom lines. Will the high cost of operation fall on to the customer? It’s very likely, especially considering operators will be relying solely on sports betting revenue, whereas books in the equally oppressive Pennsylvania market will at least benefit from crossover traffic to online and land-based casinos.

Lastly the ban on NCAA basketball and football props, which is unique to the Tennessee market, gives bettors just another reason to stay with their offshore book or corner bookie.

In short, this bill is one that starts with an excellent premise (mobile only wagering and multiple operators), and flubs it up to the point where we do hope some of the provisions are revisited in the not-so-distant future.

How TN sports betting came together

State Democratic Rep. Rick Staples got the sports wagering conversation started in November 2018, when he introduced bill HB 0001 ahead of the 2019 legislative session.

The bill proposed legalizing online and mobile sports betting in the state, along with wagering at physical kiosks. Operators would be taxed at 10% and pay a negligible $7,500 licensing fee.

The prospect of bringing sports betting to Tennessee was made possible by a groundbreaking Supreme Court ruling in May 2018, which struck down a law that, for over two decades, had limited the vertical mainly to Nevada.

TN legislators saw neighboring states either legalizing or eyeing their own sports betting bills, and were keen to establish the industry inside the state, lest they lose out on a potentially large source of tax revenue.

Officials have estimated that sports wagering could bring in $51 million annually for governmental programs, although state sports betting estimates have historically been notoriously inflated.

After adding an amendment banning prop betting on collegiate sports, lawmakers advanced the bill out of committee and it moved to the full statehouse.

More changes were later made to the bill, which were not exactly music to the ears of potential operators. Instead of a 10% tax, the rate would now be 20%, and the licensing fee would increase one hundred-fold to $750,000 – per year. What’s more, operators would be forced to buy official league data for in-game betting markets, giving the sports leagues one of their first big wins in the legal U.S. sports betting arena. But at least a mandate requiring in-person registration for mobile sports betting was nixed.

In April 2019, the legislation passed both chambers, making Tennessee the first state to legalize sports betting for mobile and Internet connected devices only.

Gov. Bill Lee, which had previously expressed concern that regulated sports betting might somehow usher in organized crime, will let the bill become law without his signature.