Tennessee Online Sports Betting Licenses

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    Online sports betting became legal in Tennessee when Gov. Bill Lee let the Sports Gaming Act become law without his signature in May 2019. Lee was opposed to expanding gambling in the Volunteer State, but he opted to go along with the will of the legislature and not stand in the way of progress.

    Tennessee became the first state in the country to legalize online/mobile-only sports wagering. Governor Lee appointed the Tennessee Education Lottery Corporation (TELC) in charge of all gambling activities, saving the hassle of creating a new regulatory body. This state isn’t home to any casinos, so the debate over online-only wagering wasn’t very difficult, or at least lawmakers didn’t have to grapple with the pull of in-state businesses and employers “throwing their weight around” over policy. Tennessee moved the ball fairly quickly in the wake of the 2018 U.S. Supreme Court ruling striking down the federal ban on sports wagering outside Nevada.

    The state introduced the first virtual-only model in the U.S. with legal sportsbook apps and no retail betting. The state has the potential to be one of the biggest U.S. markets with most of the big national brands available, looking to stake their claim in this mobile-only market. In addition to some of the bigger platforms in the state, a local outfit, Tennessee Action 24/7 became the first mom-and-pop sports betting shop to go live anywhere in the U.S. post-PASPA.

    Historically, Tennessee has not been known as “gambling-friendly.” There are no casinos in the state, nor are there plans for that to change. Which justifies why, setting up a complex betting apparatus was a slow and deliberate process. After months of careful research and debate, the official launch happened on the 1st of November 2019.

    Inside the provisions of House Bill No. 1

    Licensing, Fees, and Taxes

    • Licensed operators must pay 20% in taxes on adjusted sports betting revenue.
    • The annual licensing fee is $750,000, a relatively steep amount for a sportsbook, in addition to a $50,000 nonrefundable application fee. The TELC has 90 days to approve or deny an application.
    • Tax revenue goes toward education programs (80%), local governments on a per capita basis for infrastructure projects (15%), and gambling addiction prevention and treatment by way of the Department of Mental Health and Substance Abuse Services (5%). All of the licensing fee money goes to the Tennessee Promise Scholarship fund.
    • Sports leagues are prohibited from receiving a sports wagering license.
    • The law requires that sportsbooks have cash on hand to pay off bettors in the event of shutdown or for any other reason. It’s a way to safeguard player funds.
    • The law requires regulations addressing anti-money laundering safeguards.
    • The law creates a definition for a sports betting vendor, which is an entity contracted or hired by a sportsbook for work in offering the product. Regulators can establish minor vendor fees.

    Land-based books

    Tennessee was the first state in the country to pass online-only sports betting legislation. With no brick-and-mortar casinos or horse tracks, moving forward with a mobile-centric sports betting platform makes a lot of sense for the state.

    Unfortunately, this means that there won’t be any land-based, retail sportsbooks. Some casino-less states, like Virginia for example, actually approved the first casinos while pursuing sports betting. Tennessee did not. For now, and in the foreseeable future, the state will boast a mobile-only sports betting industry.

    The lack of retail outlets is not expected to impede growth. In other states with both land-based and online delivery channels, online betting accounts for a large majority of wagers placed. New Jersey, which has one of the most developed sports betting industries in the U.S., has been regularly accepting more than 80% of its wagers online.

    Regulates and Issues Licenses

    The industry is regulated by the Tennessee Education Lottery Corporation, in accordance with a new Sports Wagering Advisory Council, that advises the lottery corporation on various topics including tech assistance and best practices. The group is expected to meet quarterly.

    The TELC has undergone some personnel changes on the road from legal to live. Director of Sports Betting Jennifer Roberts came from UNLV in November 2019 and resigned from the TELC in June 2020. In early July, former Director of Government Affairs William Hill and ex-General Counsel in West Virginia Danielle Boyd were hired as Vice President of Sports Betting.

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