Sports betting was legalized in Tennessee in the spring on 2019. On April 30th, 2019, the Tennessee legislature approved a sports betting bill. The bill became law without the governor’s signature. It allows for mobile and online betting only with no physical sportsbooks. Nearly a year after the passing of the bill, Tennessee has still yet to launch any legal sports betting sites.
Tennessee Sports Betting Rules
Sports betting in Tennessee will be different than most other states in the country. Tennessee will only have mobile and online sports betting and no brick-and-mortar sportsbooks. The law went into effect July 1st of 2019 but has yet to see any sportsbooks launch in the state. The Tennessee Education Lottery Corp. is tasked with regulating the industry under the Tennessee Sports Gaming Act.
There is no restriction for who can apply for a mobile sports betting license. However, the $750,000 licensing fee will weed out a lot of smaller competition. Aside from the high licensing fee, there is one aspect of legal sports betting that is getting a lot of criticism in Tennessee. A proposed rule requires sportsbooks cap payouts at 85 percent. The 15 percent hold is three times the average rate in the industry (5%).
If that wasn’t enough, Tennessee is one of three states that will require the use of “official league data” for live-betting, joining Michigan and Illinois. Add in a relatively high tax rate of 20 percent and Tennessee has a number of issues to address before any launch can occur.
There is no cap on sports betting licenses in Tennessee. Anyone 21 or older will be eligible to place a bet. The only notable betting restriction is that in-play bets on collegiate events will not be allowed.
Tennessee Sports Betting Issues
A 45-day public comment period was held until January 6, 2020. The Tennessee Lottery released draft rules for the licensing and regulation of sports wagering. The comment period was to address any issues with those rules. During the comment period, more than 300 comments were made and the 15 percent payout cap was one of the most talked about issues. The Tennessee Lottery is using the comment made during the 45-day period to address and possible issues that were brought up.
According to gaming consultants Eilers and Krejcik, two-thirds of the sportsbooks polled would reconsider applying for a license in Tennessee becamse of the proposed payout cap. The 20 percent tax rate is the second-highest in the country behind Pennsylvania (36 percent). If the 85 percent payout cap remains, Tennessee may see a limited number of sportsbooks applying for a license. This would limit options for Tennessee bettors. Also, this could lead to bad pricing and products for Tennessee bettors. This could cause bettors to not only travel to other states to find reasonable betting lines but also keep them betting illegally via bookies or off-shore betting sites.
The use of “official league data” is another controversial aspect. With the margins for sportsbooks already thin, adding in extra costs on top of the high licensing fee and tax rate could potentially scare operators away. However, the law in Tennessee does allow for an exception if the leagues cannot provide the data under “commercially reasonable terms”.
Another issue that was addressed a lot was an odd one not seen anywhere else. A “parlay” is a wager made on multiple individual bets into one wager. Traditionally in a parlay, when one of the wagers results in a tie, the entire bet is not considered a loss. The payout on the bet is adjusted to exclude the leg of the parlay that resulted in a tie, making the rest of the bet still active. However, in Tennessee, one rule would require that the parlay be considered a loss in the event that even one leg results in a tie. This goes against any industry standards and is a huge disadvantage to bettors.
Major sports leagues have even voiced their concern over some of the proposed rules in Tennessee. DraftKings also voiced their concern over the parlay rule. Tennessee is seeing criticism from every angle. From local bettors to the leagues and even the companies who run the sportsbooks, they all seem to agree that Tennessee has a number of issues that need to be addressed before sports betting can launch.
When Will Sports Betting Launch in Tennessee?
An Oxford Economics Study suggests that the annual handle in Tennessee would be $4.5 billion. The biggest sports betting event of the year is the Super Bowl and Tennessee missed that boat in 2020. The next major event is March Madness and while some are hopeful that sports betting will launch in Tennessee by then, it seems unlikely at this time. A more reasonable launch date appears to be summer of this year.
The Tennessee Lottery has not offered a specific timeline for when it plans to issue its first licenses. The next big event for Tennessee sports betting is scheduled for February 18th. The Sports Wagering Advisory Council will meet on the 18th. At this meeting they will discuss the draft rules and the comments made during the comment period. All of the rules will eventually need to be approved by the Tennessee Lottery Board of Directors. The Board of Directors will meet the following day on February 19th. The goal is for the board to vote on the regulations at that meeting.
It is unknown if the licensing process will begin immediately following these meetings. There are a number of issues that Tennessee needs to address if they want to give bettors the best possible product. For the sake of bettors in Tennessee, some of these rules and regulations will be cleaned up. Perhaps all of the criticism will open their eyes and bring some changes. After these meetings, we will have a better idea of when exactly lottery officials plan on accepting applications for sports betting licenses. State Representative Rick Staples (D-Knoxville) was one of the sponsors of the bills that legalized sports betting. He told WVLT-TV in Knoxville that he and other leaders were hopeful that applications would be accepted sometime this month with a possible rollout as soon as March.
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