Tennessee Sports Betting-Related Bills On Next Week’s Legislative Calendar

The state of Tennessee is moving full steam ahead to launch online/mobile sports betting later this year, but it looks like it will also consider legislation to make minor tweaks to the 2019 Sports Gaming Act.

Legislation filed earlier this year was delayed due to the public health crisis, but the pair of proposals are now slated for a closer look next week when lawmakers return to work.

The Departments & Agencies Subcommittee has House Bill 2844 on its Thursday, May 28 calendar. The legislation, along with its companion measure in the Senate, seeks to give more regulatory control of sports betting to the nine-member Sports Wagering Advisory Council. The council, which was created by the 2019 Sports Gaming Act, has so far helped the Tennessee Education Lottery Corporation adopt rules for online/mobile sports wagering, but it could have additional duties under the proposed law change.

One of the sponsors of HB 2844 is state Rep. Rick Staples, the sponsor of the 2019 Sports Gaming Act.

The council is underneath the TELC, and there’s been some friction between the two entities. During the process of crafting the regulations, which were adopted in April, the council expressed reluctance to a fixed payout cap for the industry. The cap sets a minimum percentage of the handle that books must retain, which is the first of its kind in the nascent U.S. sports wagering industry. It has been controversial because it could result in some sports betting lines being less competitive with regulated books in other states, as well as compared to the unregulated offshore sites. The lottery will consider removing the cap down the road, but for now there’s a cap of 90%.

The other legislative proposal on the table next week is HB 2604, which would require the lottery to comply with certain diversity requirements when contracting with third parties to implement and enforce the Sports Gaming Act. The legislation, which also has a Senate companion bill, has a whopping 12 sponsors. It’s on the State Committee agenda for Wednesday, May 27.

Timeline for launch

It’s impossible to know for sure, but neither HB 2844 nor HB 2604 should slow down the process of licensing sportsbooks this summer and seeing them launch in either late summer or early fall.

As mentioned, the sports gambling regulations were finalized and the TELC is accepting applications. At a meeting last week held via teleconference, the TELC said that it has fielded dozens of questions from firms interested in the market. The ball is rolling, and regulators have stated that they want to finish the process as soon as possible.

It’s been described by the lottery as a monumental undertaking, as the Volunteer State isn’t home to any casinos. Most states that have legalized sports betting in the two years since the Professional and Amateur Sports Protection Act of 1992 fell before the U.S. Supreme Court in May 2018 have some form of casino gambling, which has made their respective regulatory paths arguably smoother.

Late last year, Rep. Staples, the sponsor of the 2019 law that made Tennessee the first in the country to pass a bill for only online/mobile sports wagering, told TN Bets that he expected sports betting to be live by the spring. That timeline didn’t come to fruition, but with the COVID-19 pandemic all but shutting down the sports world in mid-March, it didn’t end up being that big of a blow to Tennessee.

It’s not yet known which sportsbooks have applied to do business in the state, but it’s expected that the top brands will be involved, despite the fixed payout cap, a 20% tax rate, and a steep $750,000 annual licensing fee. The U.S. sports betting market is a lucrative one, and Tennessee is well inside the top 20 of states by population.