Despite no online ticket sales or digital games, the Tennessee Education Lottery has reported a big quarter to start the new fiscal year.
According to the TEL, the first quarter of FY 2021, which was July 1 to Sept. 30, saw total revenue grow to $492.8 million, a 16.8% increase ($70.9 million) compared to the first quarter of FY 2020.
The TEL said that the quarter was the best Q1 in the history of the state lottery, which kicked off in 2004.
“We ended the last fiscal year in a solid position, and we have continued that momentum through the first quarter,” TEL President and CEO Rebecca Paul Hargrove said in a statement.
Nearly all of the revenue gain came from instant games (as opposed to draw games). The TEL said that Q1 instant game revenue was $420.8 million, up $69 million from the same quarter the previous fiscal year.
From the total revenue of $492.8 million, lottery players won $319.6 million in the form of prizes during Q1 of FY 2021. The difference was $173.2 million. The TEL reported that it transferred just over $114 million to the Lottery for Education Account for the quarter.
The places where tickets are sold earn retailer commissions and incentives, and the TEL takes some money out for its operations and administrative expenses.
The FY 2021 first quarter performance followed a record-breaking fourth quarter of FY 2020 (April 1 to June 30). Total revenue of $527.3 million for that quarter was the highest of any quarter since the inception of the Tennessee Lottery more than 16 years ago.
Does this have any relevance for sports betting?
The short answer is no, but it’s a bit more complicated. Lottery gamblers are considered a different customer base than those the upcoming online/mobile sports betting apps, licensed and regulated by the TEL, are looking to cater to. Of course, there is some overlap, but generally they aren’t the same player.
You cannot gamble on sports through any retail location in the state. It will be online only.
It is notable that legal gambling in Tennessee is growing despite the economic fallout from the COVID-19 pandemic. States that already have online/mobile sports gambling are seeing record handles this fall — again, despite the pandemic and the accompanying economic woes.
Tennessee isn’t the only state to see an increase in lottery play despite the pandemic. State figures have varied based, in part, on state COVID-19 shutdown policies. Tennessee was among the least restricted states in terms of stay-at-home requirements, and many lottery retailers were considered essential businesses. Per state figures, the TEL didn’t miss a beat despite the coronavirus.
Lottery players in the Volunteer State played $492.8 million worth of lottery games in the most recently completed quarter. How does that compare to what is expected from sports bettors? Tennessee is expected to see an annual sports wagering handle of around $3.5 billion once fully developed, which would translate to around $875 million in bets per quarter.
Sports gambling operators will pay a 20% tax on adjusted gross income, in addition to a $750,000 annual fee. Tennessee is expected to begin sports gambling later this month.
The annual sports gambling market size in terms of revenue is expected to be around $250 million.