Tennessee’s sports betting industry is barely a month old, but more sports betting firms are eyeing the state, including one operator who thinks the state is perfect for its fledgling U.S. business.
That bookmaker would be ZenSports, a relatively under-the-radar company in the nascent market. ZenSports recently filed paperwork in the Volunteer State for a $750,000-a-year license to operate a mobile sportsbook. ZenSports has also sought sports wagering approval in Nevada and Virginia. The firm has plans for Colorado as well, company co-founder and CEO Mark Thomas told TN Bets.
After working non-stop the past 10 days (including all weekend) creating, printing, and organizing every document, our Tennessee sports betting license application for @zensports is now done! 💪🎉 FedEx shipment going out in the morning. Time for a nap! 😊 pic.twitter.com/uY4SfIxfUb
— Mark Thomas (@techsportsmark) November 23, 2020
The Tennessee sports betting market is currently controlled by BetMGM, DraftKings, FanDuel, and local upstart TN Action 24/7. Churchill Downs (BetAmerica), William Hill, and Wynn Sports are expected to be licensed — and possibly launched — in the coming weeks.
ZenSports could be ready to launch in the state ahead of March Madness, assuming there is one in 2021.
Tennessee should have at least 10 online/mobile sportsbooks sometime in the first half of 2021.
Application process in the state
Tennessee was the third state for ZenSports, founded in 2016, in terms of seeking entry.
Thomas said it took about two weeks in total to get the Tennessee application together, but that was with a startup mentality of working in overdrive to get it done. It would have taken much longer if the team was only working the standard 40 hours per week on the application, according to Thomas.
While the $750,000 fee is a relatively high one, the Tennessee market was especially attractive to ZenSports because there’s no retail component. The state has no gambling facilities.
“The total costs to go into Tennessee are still pretty reasonable,” Thomas explained. “[The fee] is offset by the lack of a need for a brick-and-mortar partnership. I’d rather have the higher licensing fee. The [90% payout] cap part is an interesting one. I get why they are doing it, to make sure the tax revenue streams are worthwhile, but I don’t think that is as consumer friendly.”
Tennessee regulators were the first in the country to implement an annual fixed payout cap. It requires sportsbooks to have a 10% hold, or win percentage against gamblers, at the end of a year. The Tennessee Lottery said it will revisit the cap in the future and possibly adjust or even eliminate it altogether.
ZenSports has innovative betting product
If licensed, the company will operate a traditional online/mobile sportsbook in Tennessee, but it has plans to eventually offer peer-to-peer sports betting, should the state allow it. ZenSports has a long-term view on sports wagering, and for now it’s trying to get its foot in the door.
“We can and do traditional bookmaking,” Thomas said. “We are all about choice for the consumer. At the same time, you can create and accept bets on peer-to-peer as well. In terms of the legalization of all of that, we will do whatever is legally required to be licensed in a state and nudging and pushing for regulators to allow certain things. It’s kind of us letting them know how it works. [It’s] new ground that we’re breaking and working within the confines of the law and showing how consumer friendly” the product is.
In peer-to-peer, ZenSports would take a fee from the action, in contrast to the vig on a traditional sports bet made against the house. Some bettors may find more value in peer-to-peer.
For Thomas, sports betting is already a skill-based gambling vertical, but peer-to-peer betting markets facilitated through the ZenSports platform can add another element to gambling for value.
“I’m a believer that traditional sports betting is skill-based,” he said. “You add just another layer of skill-based gambling when you factor in what peer-to-peer is, and if someone else is willing to take that. To match both sides up, it’s the equivalent of two people sitting at a bar and betting against each other.”
The peer-to-peer format removes the “centralized bookmaker” from the process. In this form of wagering, betting funds are put in escrow so the winning side is guaranteed to get paid. ZenSports’ peer-to-peer sports betting marketplace is currently only available to gamblers outside the U.S.