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Overview: Online Sports Betting in Tennessee and What New Bettors Need to Know

December 15, 2020by Christopher Gerlacher0
Betting KnowledgeFeaturedGambling 101Opinion FeaturesSports Betting KnowledgeState Laws & Legislation

Overview: Online Sports Betting in Tennessee and What New Bettors Need to Know

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Overview: Online Sports Betting in Tennessee

Although Tennessee hasn’t been receptive to the gaming industry, it took the big step of legalizing sports betting. Tennessee set strict controls on the industry, which normally include partnerships with casinos. However, Tennessee has no commercial casinos, so there’s nowhere to put retail sportsbooks. Consequently, Tennessee is the only sports betting market in the country that is entirely online. It’s odd that one of the conservative gaming states ended up with online sports betting before commercial casinos. However, it’s still a straightforward place for bettors to navigate. Here’s everything you need to know about Tennessee’s online gaming market.

How Online Sports Betting Came to Tennessee

If it wasn’t for sports betting, Tennessee would still have some of the most restrictive gaming laws in the United States. Tennessee has a state lottery and allows some charitable gaming. However, casinos have been out of the question for a long time. The current Tennessee Governor, Bill Lee, hasn’t been shy about voicing his intense dislike for casino gambling. He believes casinos are the “most harmful form of gambling, which [he] believe[s] prey on poverty and encourage criminal activity.”

If he doesn’t like casinos, it’s unlikely he’ll like mobile sports betting – it’s available to every smartphone user who’s over 21 and knows their social security number. But its national popularity and the fact that most of Pennsylvania’s, Colorado’s, and New Jersey’s sports betting revenue comes from online sports betting may have led him to stand out of the way. Since the bill was for entirely online gaming, Tennessee’s anti-gambling governor allowed the bill to pass because it kept casinos out of Tennessee. He cites “compromise” as one of the reasons he allowed the bill to pass without his signature.

Tennessee Online Sports Betting Revenue

Online sports betting is one of Tennessee’s newest ventures. However, it’s already popular. Tennessee bettors wagered $27 million in the first week of sports betting. (It seems that Tennessee bettors don’t have the same objections to gaming as their governor.) That $27 million handle is great for the industry. Tennessee’s new sportsbooks kept just over $2.5 million in profit. At a 20% tax rate, Tennessee received $509,000 in tax revenue.

Here’s where all that money goes:

Percent of Tax Revenue Where Tax Revenue Goes Amount Of First Week’s Revenue
80% Tax Revenue Tennessee Education Lottery $407,200
15% Tax Revenue Local Government Infrastructure $76,350
5% Tax Revenue Gambling Addiction Treatment Programs $25,450

Most sports betting taxes will go toward Tennessee’s education lottery fund. It’s a lottery-run scholarship and grant program. Don’t be fooled by claims that sports betting will broadly fund all things education. Those taxes go toward education, sure. But if you’re hoping for an industry that directly funds classrooms, schools, and teachers, this isn’t it.

However, you may be heartened by the infrastructure and public service projects that’ll be funded. Directing some of the money toward gambling addiction will hopefully help those who are negatively affected by mobile gaming, too. But that usefulness will depend on how much money gambling programs need to function effectively.

If you’re a Tennessee resident, it’ll be important for you to monitor these programs. They could underperform if lawmakers fund them with sports betting taxes alone. Programs like these could require multiple sources of funding to operate like they’re supposed to. And if lawmakers sneak money away from these programs, it’ll be around the same time sports betting tax revenues become impressively high.

What Types of Online Gaming Are Coming to Tennessee Next?

Bettors shouldn’t expect any gaming expansion any time soon. Governor Bill Lee has made his stance on expanded gaming clear. He says he’ll oppose any more gaming expansion – which of course includes his veto.

However, his opposition to sports betting legalization did little for him. To override a Governor’s veto, the Tennessee legislature would only need a majority vote. Lawmakers could vote the same way they did the first time. Governor Lee must’ve known the veto would’ve been overturned, and that would’ve put him in a tricky political spot. Having his veto overruled could’ve cost Governor Lee political capital. However, lawmakers and even the voters may not be with him on gaming issues. If new types of gaming come to Tennessee, it probably won’t be under Governor Lee’s leadership.

Overview: Online Sports Betting in Tennessee

Online sports betting is the only type of online gaming allowed in Tennessee. Nothing else is expected to come next. However, future Tennessee representatives could introduce new types of gaming. Whatever they decide, sports betting has begun a national expansion of gaming that could encourage new types of gambling in traditionally anti-gambling states. Tennessee took the unusual step of legalizing mobile sports betting before retail casinos.

If Tennessee’s new sports betting market has piqued your interest, check out our beginner’s guides to sports betting. You won’t be able to wager in Tennessee unless you’re in the state. But once you check your state’s sports betting laws, you can either begin betting or continue waiting for your state’s sports betting bill.

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