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. It hasn’t been an easy rollout, however, after a lengthy delay the industry is moving forward again in 2020. Once operator licenses are awarded, Tennessee is a go.

Unlike other states which have already legalized the industry, Tennessee sports wagering will be available exclusively via smartphones, tablets, computers and other Internet connected devices. It is online-only. There will be no retail sportsbooks in the state without further legislation.

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.

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

The law officially went into effect on July 1, 2019, but specific regulations still needed to be hashed out. Officials were hopeful that the 2019 football season would be in play, but it didn’t come together in time. In fact, it wasn’t until April 2020 that the state finally agreed and set its official sports betting rules. At this point, the industry may see its first legal bets placed in July 2020.

Tennessee Sports Betting Details

Here are the main pillars of Tennessee’s sports betting industry:

• 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 Education Lottery Corporation
• Operator tax rate: 20%
• Application fee: $50,000
• Annual licensing fee: $750,000
• Where the taxes go: Education, local government and gambling addiction treatment programs

Will Tennessee be a bettor-friendly market?

Time will tell, for a couple of different reasons that we’ll break down for you below. But, let’s start with…

The Good

There are a lot of positives about the TN betting market. 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, just as there won’t be in Tennessee.

Also a plus, an unlimited amount of 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. More operators means better competition, and better competition means superior products, promotions, and general value for bettors.

The Not So Good…

Tennessee elected to include a few conditions that will be expensive for online sportsbook operators, and may will ultimately trickle down to the bettor in the form of less competitive lines. The $750,000 annual licensing fee is pricy, but not overwhelming. However, the exorbitant 20% tax rate will be a hurdle – and is substantially higher than most regulated markets in the U.S. In addition, Tennessee will require its operators to use “official league data,” which is another expense that the sports betting sites will have to cover.

As far as betting restrictions, the only major omission from the Tennessee market will be college prop bets. For example, you won’t be able to wager on the number of yards the Tennessee running back totals, or the number of points that a NCAA basketball player scores.

However, all of these reasons pale in comparison to the state’s official decision to require an excessively large hold.

10% Hold

The hold is essentially the amount of your wager that the sportsbook keeps after the bet has been resolved. The higher the hold is, the lower your payouts are.

In the months since sports betting was officially legalized in July ’19, the state’s proposed mandatory 15% hold was the elephant in the room. It was a number that would clip the industry’s wings before it had a chance to fly. Setting the hold that high would seriously impede a sportsbook’s ability to offer fair, competitive odds, and would push would-be bettors back to illegal bookies and offshore sites.

After much deliberation and feedback, the state announced its official rules and regulations in April 2020, which revised the number to 10%. Most other states land in the 7 – 8% range. Nevada, the capital of sports betting in the United States, thrives at just 5%. While obviously better than 15%, the 10% number is still misguided regulation that will ultimately be a cost assumed by bettors.  One area that may suffer is payouts on parlays. which may be inferior to what’s available in other markets.

In short, the TN sports betting market will start with an excellent premise (mobile only wagering and multiple operators), but ultimately stumbles with a few unfriendly terms. After a year the state’s advisory board will be able to revisit the 10% hold – we hope they do.

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

The state finalized and adopted its official rules and regulations for sports betting on April 15, 2020. Online sports betting operators will arrive soon in Tennessee!