The Tennessee Lottery has awarded its first wave of sports betting licences.
The Tennessee Education Lottery’s (TEL) Sports Wagering Committee has conditionally approved sports betting licences for three operators as the state prepares to launch sports betting on 1 November.
This comes after the TEL revealed plans to launch the state’s sports betting market by 1 November.
DraftKings, FanDuel and BetMGM approved
At a Special Meeting of the Sports Wagering Committee held on 23 September, the state regulator gave conditional approval for sports betting in Tennessee to BetMGM, DraftKings and FanDuel.
The operators may receive full regulatory approval at one of the Sports Wagering Committee’s later meetings. The Committee has meetings scheduled for 5 and 16 October where it will review more licensing details and consider more sports betting applications.
The Committee also approved its first supplier application during Wednesday’s meeting and 26 other vendor applications. At the time of writing, 22 vendors, which are mostly payment service providers and affiliate or marketing businesses, have received licenses to operate in Tennessee.
Board chair Susan Lanigan said: “The staff at the Tennessee Lottery performed a tremendous amount of work and due diligence to prepare us for these decisions today. We appreciate their efforts as we work to establish and support a responsible and competitive sports wagering program in Tennessee.”
Sports betting in Tennessee
Tennessee is set to become the first state to only allow online and mobile sports betting, without requiring online operators to partner with a land-based operator.
In late May 2019, Tennessee became the fourth state to legalize sports betting. Governor Bill Lee allowed the state’s sports betting bill to pass into law without his signature, despite being opposed to the expansion of gambling.
Under the legislation, operators will have to pay a licensing fee of $750,000 and will be taxed 20% on their gross revenue. The regulations also call for the mandatory use of official league data.
In April of this year, the Lottery approved sports wagering rules with several of these being amended. The most controversial element of the rules saw regulators cap the annual payout percentage of each sports betting operator at 90%. This means that the state requires a minimum hold of 10% from every sports betting operator.
During a meeting held in August, it was revealed that operators who don’t hold the 10% payout may be subject to fees and license suspension as punishment.
The inclusion of a fixed payout rate may lead to inferior pricing across some betting markets and could lead to sports bettors choosing to place wagers with illegal offshore or unregulated sportsbooks. This could also have a significant impact on the taxable revenue which would otherwise be allocated to Tennessee’s education funds.