The Tennessee Legislature is looking at two areas of sports betting in the state—the 10 percent win rate and official data—that some believe need to be changed. Separate bills in both the House and Senate are addressing those concerns.
The 10 percent win rate has been problematic for operators since sports betting launched in the Volunteer State in 2020. Sports books have had a difficult time reaching the 10 percent threshold. Current law mandates a $25,000 fine if the 10 percent hold is not met.
The Tennessee Sports Wagering Advisory Council (SWAC), told legislators that most sportsbook operators failed to achieve that hold last year. They could either pay to get to 10 percent or pay a $25,000 fine. Most chose the fine.
“If I have a choice between paying $1 million and paying $25,000, I’m going to take the $25,000 every time if nothing’s going to happen to me,” SWAC member John Valliant said during the council’s February meeting.
Pending legislation would get rid of the 10 percent hold and instead institute a privilege tax of 2 percent of their total handle instead of 20 percent of their adjusted revenue.
Senate Bill 475 passed the Senate last week by a 30-0 vote. The House bill (HB 1362) is similar to SB 475 but calls for a 1.82 percent tax on handle. If passed, it would be the first state handle tax in the U.S.
The Tennessee General Assembly’s fiscal review committee estimated the increase in annual revenue for the state at approximately $7.3 million.
Another subject the House and Senate bills address is the requirement that sportsbook operators have to use official data from sports leagues during in-play wagering.
SuperBook and Betly both complained that NFL data from Genius Sports was not “commercially reasonable.”
SWAC Executive Director Mary Beth Thomas said during a council meeting on March 1 that the issue was complex. The members of SWAC said the issue should be decided by the legislature.
“As you all know, Tennessee is the only state with a mandate worded in the way that ours is, that requires the use of official league data for in-play wagering in this manner,” Thomas said. “Other states have official league data requirements that can be triggered by league requests, but to our knowledge, our state’s unique in our statutory mandate.”
