Tennessee Approves Controversial Sports Betting Rules

Published May 5, 2020 by Elana K

Tennessee Approves Controversial Sports Betting Rules

The Tennessee Education Lottery Corporation Board of Directors unanimously approved the state's final sports betting rules, including a controversial 90% hold cap.

Sports betting may be shut down due to COVID-19, but that doesn’t mean that states aren’t planning ahead for a time when sports resume. Tennessee is one such state preparing for a brighter future. The state Education Lottery Corporation Board of Directors unanimously approved the final sports betting rules, and it hopes that the entire operation may be up and running as soon as July (corona-permitting).

Sports betting was officially made legal in Tennesee in May 2019, but it’s been a bumpy road getting lawmakers to agree on the details. Some of the stipulations approved recently are controversial, including the betting cap and high licensing fees.

Tennessee Sports Betting Rules

Tennessee is clearly not afraid of being a state of firsts. It was the first state to approve a mobile-only sports betting industry, and it is also the first state to cap the amount a bettor can win. While the mobile-only issue is likely to encourage potential sports bettors, the cap is likely to discourage them. The cap is set high at 90% of the bettor’s original stake, but it’s a cap nonetheless.

The reasoning behind the seemingly outlandish rule is so that sportsbooks can generate at least a 10% hold. Since the repeal of PASPA in May 2018, the average natural hold for legal sportsbooks has been 6.8%, with a Nevada hold of 5.4%. These holds are obviously lower than 10%, but more importantly, they are natural, not state-enforced. Tennessee's betting cap is very likely to have a negative impact on how many people sign on to place wagers.

Tennessee also has a 20% tax rate, which is significantly higher than other states, and is charging operators a hefty $750,000 licensing fee. All of these details do not create a recipe for success. However, Chairman of the Board of Directors Susan Lanigan said that these rules will be revisited one year after sports betting goes live. So at least there is some hope. 


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