Sports betting in Tennessee continues to do well. The Sports Wagering Advisory Council (SWAC), which oversees sports betting in the Volunteer State, recently released its revenue report for March.
In March, people in Tennessee bet nearly $393 million on sports, which helped operators make a total of $43.7 million in profits. The state also earned almost $9 million in tax revenue.
Driven mainly by March Madness gambling, what stands out about these numbers is the significant growth from last year. The figure is a 6.1% year-over-year increase and a 20% monthly increase from the more than $327 million handled in February. And the nearly $44 million in profits is a 92.1% year-over-year increase and up more than 37% compared to February.
Sports Betting in Tennessee Is Unique
What makes these numbers even more impressive is Tennessee is the only state with online sports betting but no retail betting available. And that’s not all.
Tennessee is unique in that it mandates all sportsbooks to hold 10% of their handle. The hold is the amount of money that sportsbooks keep after paying out promotions and incentives. Rather than 10%, a typical hold is closer to 5-7%. The 20% tax rate on the 10% hold should result in a bigger tax increase for Tennessee than if the hold requirement did not exist.
However, sports betting operators in Tennessee have resisted, alleging that the mandated hold makes it difficult for them to tempt gamblers with bonuses and competitive odds. They claim that offshore and unauthorized books can provide better perks to users.
New Sports Betting Bill Would Change Tax Structure
Because of this, lawmakers in Tennessee are currently considering altering the tax structure.
If SB475 is approved, the state will no longer tax sportsbooks’ holds. Instead, Tennessee will tax sportsbooks based on their betting handle, or the amount of money wagered by players. The current 20% rate on gross monthly revenue paid by operators will be replaced by a 1.85% rate on the handle if the bill becomes law.
SB475 is currently waiting to be signed by Gov. Bill Lee. Should it pass, Tennessee will be the only US jurisdiction to tax betting handle rather than revenue. While the tax would be just 1.8%, it would give the state a huge revenue bump. Lawmakers estimate it would generate an additional $7 million per year.
SB475 Also Addresses the Official Data Mandate
The other big issue addressed in SB475 is the official data mandate.
Sportsbooks are now required to pay Genius Sports for NFL league data. SuperBook Sports and Betly both complained to the Sports Wagering Advisory Council (SWAC) that paying Genius Sports for official NFL league data was commercially unjustified.
SWAC elected to kick the can down the road to legislation rather than act on the proposal. SB475 includes wording that eliminates the need to use official league data, such as Genius Sports.
Sports Betting Continues to Grow in Tennessee
Overall, sports betting in Tennessee is growing steadily and is becoming more popular each year. The state launched online sports betting in November 2020 and has seen steady growth ever since. And they’re doing it without brick-and-mortar (licensed) sportsbooks.
*Bookmakers Review will continue to follow the developments.
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