Tennessee expects to go live with legal online sports betting as early as July 2020, sources tell The Action Network.
It's been a long road to getting the sports betting rules written and approved — Gov. Bill Lee allowed the sports betting bill to become a law in May 2019 — but regulations are expected to be released on Friday, and some of them are sure to be controversial.
Tennessee Sports Betting Rules
Tennessee will cap the amount a bettor could win at 90% of his/her original stake, becoming the first state to mandate that the books generate at least a 10% hold. (A sportsbook's "hold" percentage is simply its gross revenue divided by the total dollars wagered. So if a book takes in $1,000,000 in bets and makes $100,000 in revenue, its hold percentage would be 10%. Nevada has historically maintained a hold rate in the 5-6% range. New Jersey has been around 7% since launching.)
Such rules mean bettors in the state of Tennessee will be forced to pay a much steeper vig on their wagers than what you see in other states — a 10% hold implies -125 vig per side on a standard bet with two options ($125 bet would only profit $100 if it wins). That could, in turn, keep Tennessee from producing the 9-figure monthly handles we've seen from states like New Jersey, Indiana and Pennsylvania, which did not institute such regulations.
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Tennessee will also require operators to pay a steep licensing fee ($750,000) and tax rate (20%). Illinois ($20 million for online-only operators) and Pennsylvania ($10 million) have the steepest licensing fees, while New Jersey ($100,000), Indiana ($100,000) and Iowa ($45,000) have opted to go much lower.
Legal online sportsbooks that want in on the action in Tennessee can start applying for their licenses next week, per the AP. The lottery, which will regulate sport betting in the state, will have 90 days to approve or deny those applications.
The state has said it will revisit these rules after one year of operating, and if they have the expected impact (lower overall handle, and thus, less tax revenue generated than expected), then the state could tweak them going forward.
"While the state could conceivably raise the [90%] cap at some point in the future, it would be difficult to lower once expectations were set," a spokesperson for Lt. Gov. Randy McNally told the AP.
Other Legal Sports Betting States
When Tennessee goes live with online betting, it will join New Jersey, Pennsylvania, Indiana, West Virginia, New Hampshire and, likely, Colorado (expected to go live in May) as the states with full mobile betting, meaning you can register for an account and place bets from anywhere within the state. Virginia could also join this batch of states before the end of 2020.
Arkansas, Delaware, Illinois, Iowa, Michigan, Mississippi, Montana, Nevada, New Mexico, New York, Oregon and Rhode Island have legal sports betting, but they either allow for only in-person wagering (no mobile whatsoever), limit your online betting to when you're inside a casino, or require you to register for an online betting account in person.
