Does DraftKings, Boost Mobile Deal Rub Up Against TN Rule Prohibiting Retail Books?

Boost Mobile locations wouldn't be retail sportsbooks, but they'd have some similarities
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DraftKings and Boost Mobile are now together in a sports gambling partnership that is supposed to eventually see mobile devices sold by Boost Mobile having the DraftKings Sportsbook app pre-installed. Would that square with Tennessee’s regulations for sports gambling?

Tennessee made history as the first state in the country to legalize and regulate online-only sports betting. There are no casinos in the state, and policymakers went with an industry confined to the internet. It was a fair play, as other sports betting states that also have a retail component are seeing more than 90% of their betting handle come via the internet.

The Volunteer State made it clear that it wasn’t interested in retail betting, but operators have shown they will do what they can to involve physical locations to bolster their businesses while avoiding breaking rules.

How deal might work in Tennessee

In Tennessee, the regulations don’t allow a sportsbook to “directly or indirectly operate or supply” a device used for wagering at a brick-and-mortar business. In other words, the device, whether it be a phone, tablet, or computer, must belong to the bettor. The rule was relevant for BetMGM’s relationship with Buffalo Wild Wings, as the restaurant chain is not allowed to provide patrons with any device to facilitate wagering.

Here’s the full Tennessee rule: “Sports Gaming Operators may not directly or indirectly operate or supply kiosks, service stations, terminals, mobile devices, computers, or other devices or equipment for the purpose of Players establishing or accessing Sports Gaming Accounts at any physical location licensed to conduct business within the State of Tennessee.”

It appears the Boost Mobile arrangement would be in the clear here, as people would be purchasing a mobile device with DraftKings Sportsbook just one of many apps or features installed on it. It appears that Boost Mobile locations could actually provide incentives for customers to establish a DraftKings account while on site, though part of the deal reportedly includes a plan to have bettors — who don’t necessarily have to be Boost Mobile customers — be able to fund their DraftKings accounts with cash at a Boost Mobile location. Under the duo’s plan, withdrawals in cash will also eventually be allowed.

Funding a sports betting account at a brick-and-mortar business isn’t in violation of the regulations, though it appears regulators will have to sign off on the plan. The 2019 Sports Gaming Act states a sports betting account can be funded with a method “approved by the rule of the board that is initiated with cash.”

Regulators recently have mulled over sportsbook gift cards at grocery stores.

All about making betting easier, firms say

For Boost Mobile and DraftKings, the firms are trying to make gambling “more convenient.” That convenience appears to test the line drawn against any sort of retail sports gambling in the state.

“Joining forces with DraftKings to make sports entertainment more convenient for our customers is the next step in delivering value-added services and entertainment to our users,” Andrea Henderson, Boost Mobile’s head of marketing, said in a statement. “We want to be more than just a utility to our users, serving as a lifestyle resource and a source of entertainment.”

According to a report from CNET, Boost Mobile will not be getting a cut of DraftKings’ gambling winnings under the deal. In other words, no revenue sharing, which could be important for a regulatory OK.

Nonetheless, the deal between a major wireless provider and a sportsbook appears unprecedented in the nascent U.S. regulated sports betting industry, so regulators will certainly discuss its impacts.

Due to a new law enacted in Tennessee, regulatory duties are being transferred from the Tennessee Education Lottery to what was previously an advisory council. The nine-member council is tasked with promulgating its own sports betting rules in the coming weeks or months.

Photo by Bruce VanLoon / Shutterstock.com

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