Tennessee’s sports betting market finally has a launch date.
On Tuesday, Tennessee Education Lottery (TEL) CEO Rebecca Hargrove said it is aiming to launch the state’s sports betting market by 1 November at the latest.
This means that Tennessee residents will be able to legally bet on sports during the upcoming football season.
Sports betting became legal in Tennessee in May 2019 and since then, Colorado, Illinois, Iowa, Michigan, Montana and New Hampshire all managed to legalise and launch their sports betting markets.
During Tuesday’s Sports Wagering Advisory Council meeting, Hargrove revealed that four operators and approximately 20 vendors and suppliers have applied for licenses. The names of the operators were not disclosed; however, media sources say that BetMGM, DraftKings and FanDuel have applied for a license. The fourth company is Tennessee Action 24/7, a local Tennessee company that offers free-to-play games.
On Tennessee Action 24/7’s website, a message says that the TEL is “currently processing our Sports Gaming Operator license application.”
In its latest quarterly report, MGM resorts revealed that it currently has market access and plans to launch sports betting operations in Tennessee later this year.
Online sports betting only
Unlike other states with legal betting, Tennessee’s sports betting laws only permit online and mobile sports betting. Tennessee is the only state to legalise online-only sports wagering, which makes it an outlier in the wider US gambling market.
In addition to only offering online betting, Tennessee will not place a limit on the number of operators that can enter the market. This means that any operator who can afford the $750,000 a year license fee can apply for a sports betting license.
However, there are some drawbacks to the sports betting system which include a 20% tax rate and the mandatory use of official league data. In addition to this, Tennessee regulators introduced a cap on the annual payout percentage of each betting operator.
A 10% sports betting hold
Tennessee’s regulators capped 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.
While the hold is not ideal, it is an improvement on the original 15% hold that was proposed with the legislation.
During Tuesday’s meeting, 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.
Sports betting in Tennessee
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.
In a statement, Lee said: “I do not believe the expansion of gambling through online sports betting is in the best interest of our state, but I appreciate the General Assembly’s efforts to remove brick and mortar establishments. This bill ultimately did not pursue casinos, the most harmful form of gambling, which I believe prey upon poverty and encourage criminal activity.”