Sports betting is soon coming to Tennessee. That will make them the fourth state this year to legalize it. The odd part is, sports betting will be online only in the Volunteer State.
The bill, S 16, is expected to become law on May 25. Governor Bill Lee has said he won’t sign the bill but will let it become law without his signature. Lee has been opposed to gambling expansion but says he won’t stand in the way of his residents desire to bet on sports.
The provision to allow for retail betting was removed from the bill, making it an online-only measure. Licensing fee will be $750,000 annually, and the tax rate will be 20 percent. The bill also contains language that requires sports betting operators to use official league data for live-betting. This will make Tennessee the first state to require the use of official league data.
Tennessee’s fees are in the ballpark of Pennsylvania’s, which are the highest in the country. Pennsylvania requires a $10 million licensing fee, but that is only a one-time fee. That means that Tennessee operators will pay more than that after 15 years with the $750,000 annual fee. The tax percentage of 20 percent is also the second highest, behind Pennsylvania’s 36 percent.
With the fees in place, operators can expect to pay around 27 cents for every dollar of revenue to the government and the leagues. Being that there will be no casino to partner with for these online sportsbooks, there will be no existing customer base to bank on. Marketing will be key. That gives huge advantages to the likes of DraftKings and FanDuel, who have millions of members and industry-leading advertisement.
Once the bill passes, bettors can expect to see online sports betting up and running in the state by July 1.
Tennessee has the most bordering states (along with Missouri) with eight. That gives Tennessee a huge advantage, especially with mobile betting. Of those eight states, only Arkansas and Mississippi are ahead of Tennessee in the sports betting race.
Tennessee can expect to see a lot of out of state betting traffic from a number of states. Kentucky was unsuccessful in legalizing sports betting earlier this year. Georgia doesn’t have any casinos, so Tennessee can expect to see a number of their residents make the trip to Tennessee to place a bet.
Bettors in Tennessee will be able to register for a betting account remotely. Iowa is requiring in-person registration, and many believe that could hinder revenue. States like New Jersey and soon to be Pennsylvania allows for remote registration.
Once sports betting passes later this week, all eyes will focus on how long it will take for the first online sportsbook to open up. Once it does, rest stops along the borders of Tennessee can expect to see a lot of traffic. Out of state bettors will be flocking to state lines to place their bets.