The Tennessee Sports Wagering Council reported a record $520.8 million sports betting handle for September on Thursday, the second time in state history it surpassed one-half billion in wagers.
The previous record in the all-digital state was $515.5 million set last November. The Volunteer State saw its flagship college football team post two wins over ranked teams among its three September victories, with Tennessee finishing the month ranked fifth in the AP Top 25 and sixth in the Coaches' Poll with a 4-0 record.
Memphis went 3-1 in the month of September as both college teams fared better than their NFL counterpart. The Titans stumbled out of the gate with three straight losses before upsetting Miami 31-12 on the road Sep. 30.
Handle was up 24.6% compared to last year and 52.3% from August. The $3.55 billion in year-to-date wagering is up 23.2% from the first nine months of 2023.
The state received $9.6 million in taxes based on its 1.85% levy on handle. Tennessee is the only state with commercial wagering that derives tax revenue from handle as opposed to operator revenue, and it has collected $108.5 million in receipts in the 15 months since making the switch in July 2023 from taxing adjusted gross sportsbook revenue at 20%. The $65.6 million in tax revenue for the first nine months of 2024 is $8.8 million ahead of last year's pace.
Did Tennessee Leave Tax Money on the Table in September?
Running September Top 10 #SportsBetting handles by state:
1 North Carolina ~$575.4M
2 Maryland $532.9M
3 Tenn. $520.8M
4 Kansas $248.9M
5 Wash DC $58.1M
6 Maine $51.8M
7 West Va. $46.4M
8 Delaware $23.2M
9 Montana $6.8M
10 TBD#SportsBettingX#GamblingX— Chris Altruda (@AlTruda73) October 10, 2024
The SWC does not collect operator revenue data since it taxes handle, making comparisons to its previous method of taxation difficult. But when reviewing September revenue reports from other states, it appears probable Tennessee collected less money taxing handle compared to the traditional levies on operator winnings.
The nationwide hold on gross revenue for the first eight states to release figures is a whopping 12.8% against $1.54 billion handle, with North Carolina and Maryland also reporting more than $500 million in wagers as well as double-digit holds. Applying that 12.8% win rate to Tennessee's handle, there would have been an estimated $66.5 million in gross operator revenue.
When removing the $1.3 million for the 0.25% federal excise tax on handle, the state would have been eligible to levy taxes on $65.2 million in AGR. The $13 million-plus in receipts is over $3.4 million more than the actual amount collected for September.
Another hypothetical uses the nationwide hold on gross revenue for 2024, which is 9.6% from $85.2 billion worth of wagers. In this instance, revenue would have been $49.8 million and adjusted winnings would have totaled $48.5 million. The difference in tax receipts was far more narrow — the 20% rate would have provided $84,300 more in receipts.
A final hypothetical would have been using the 8.5% hold for the entire post-PASPA era with $394.8 billion handle. Tennessee sportsbooks would have generated an estimated $44.4 million, with AGR totaling $43.1 million. In this instance, the tax on handle would have generated $992,800 more than the 20% rate on AGR.
