Tennessee Eyes Mobile Sports Betting Launch By The Return Of Major Sports

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The Tennessee Education Lottery Corporation on Wednesday held a brief teleconference meeting to put the finishing touches on regulations for online/mobile sportsbooks that were approved via statute in mid-2019.

It’s been a long road to this point, and the TELC acknowledged that during the phone call that dozens of industry stakeholders were listening to. “We’ve been working on this a long time,” said Susan Lanigan, chair of the TELC’s Board of Directors. “We’ve tried to take in as many comments and positions as we can.”

The first draft of the regulations was released in November, and the final, adopted version is expected to be made public at the end of this week.

Timeline for launch

Lanigan said during the meeting that sports betting regulators expect to have legal online/mobile wagering launched by the time sports return to the airwaves (presumably meaning U.S. sports). There’s probably little desire for any book to launch in Tennessee while niche sports are the only live betting options. The state will allow wagering on eSports.

While there is no timeline for when sports will resume, almost surely without fans, there is momentum to see them return sometime this summer, depending on COVID-19 testing becoming widely available and all the necessary precautions being in place.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, who has risen to prominence in recent weeks thanks to almost daily White House press briefings, vouched this week for the plan to resume games without spectators.

“Nobody comes to the stadium,” Fauci told Snapchat’s Good Luck America. “Put them in big hotels, wherever you want to play. Keep them very well surveilled … have them tested like every week and make sure they don’t wind up infecting each other or their family and just let them play the season out.”

Fauci was speaking in regard to Major League Baseball.

Prior to the public health crisis, the TELC was eyeing a launch ahead of the upcoming NFL and college football seasons, so it’s probably unrealistic to think that sportsbooks in the Volunteer State would be up and running if MLB resumed games in May or June.

The UFC, which recently saw the bottom fall out of its April 18 event after a U.S. senator weighed in, is now eyeing a return in the first half of May.

While the NFL hasn’t hinted at not playing in 2020, a report Wednesday from CBS indicated that college football might be off the table.

Tennessee sportsbooks could enjoy a potential playoff run from the Memphis Grizzlies if/when the NBA season is salvaged. The team was the eighth seed in the Western Conference when the season was put on hold last month. On Wednesday, USA Today reported that Oklahoma City Thunder player Chris Paul, president of the National Basketball Players Association, is optimistic about 2020.

“If there is any way possible that we can play games for our fans without putting anyone’s health at risk, that is what everybody’s option is,” Paul said. “Not only are we ready to get back and play. The fans are ready to see sports. But everybody understands health comes first before any of that.”

Fixed payout cap is back

By far the most complicated and controversial provision in the regulations is a fixed payout cap that sportsbooks must adhere to over a set time frame. The TELC on Wednesday said that it would go with a 90% cap, but it didn’t provide the period under which that would be an aggregate.

This means that sportsbooks would have to have a hold of at least 10%. It’s unclear how the rule will ultimately impact the sports betting products in the state, but it could make some betting markets — such as parlays and futures — less competitive with illegal unregulated platforms that operate from overseas. The lines on individual sports contests could be competitive with other legal markets in the U.S.

The cap is the first of its kind among the legal sports gambling jurisdictions in the country. Other markets typically see a 5-7% hold organically.

Lanigan said that the cap will be revisited after the first year. It is possible that it’s removed or raised.

The cap was originally set at 85% in the first draft of the regulations, so 90% is an improvement. It was tinkered with over the course of several months, before landing at 95% in March. However, after further consideration, including meeting with Lieutenant Governor Randy McNally, a Republican, the TELC went back down to 90%. The sports betting industry isn’t fond of the decision.

The payout cap was championed by TELC CEO Rebecca Hargrove, who claimed that without a cap large sports betting companies (such as a FanDuel, for example) could come into Tennessee and create a monopoly by being willing to lose money to sports bettors in order to drive out the smaller operators.

Tennessee is charging a $750,000 annual licensing fee as well as a 20% tax rate on sports betting revenue.

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Brian Pempus

Brian served as a senior reporter and online content manager for Card Player Magazine for nearly a decade before joining USBets in October 2018. He is currently focused on legal and regulated sports betting and online gaming. He's an avid jiu-jitsu practitioner in his free time.

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