Tennessee Sports Betting On Horizon; Will Sportsbooks Follow?

Tennessee Sports Betting On Horizon; Will Sportsbooks Follow?
© USA Today

The Tennessee Education Lottery Corporation has posted applications for sports betting licenses on its website, but it remains to be seen which sportsbooks will want to enter the all-mobile betting market.

Tennessee on April 15 set an unprecedented mandatory hold of 10% for at least one year, highest among states with legal sports betting. The hold is what the operators keep after wagers are settled with bettors. In this case it’s 90 cents for every $1 bet. The state also approved a high license fee ($750,000) for sportsbook operators.


RELATED: More on Tennessee sports betting


Some sportsbook operators contacted said they are planning to enter the market. Others said they are researching the new regulations.

Yaniv Sherman, 888 Holdings head of commercial development, said the company is looking into the Tennessee market.

“Now that the secondary legislation is out we can evaluate the potential market and business potential of Tennessee,” Sherman said in an email. “The combination of a relatively high tax rate, mandatory hold and license fee (paid to the state and not to a physical property, but basically an add-on tax) indeed creates a challenging landscape.

“A 10% mandatory hold would mean operators will need to maintain an even higher hold, to create a buffer. We’ve been able to operate in similar commercial frameworks in other territories around the globe, but that devil is in the details, Tennessee should be a strong sport state with its collegiate and professional legacy.”

Roar Digital is planning to enter the Tennessee market with its BetMGM mobile sports betting app.

”We’re preparing our application for BetMGM in parallel with engaging with the regulator to clarify the detail around the 10% hold requirement,” Elisa Richardson, spokeswoman for BetMGM, said in an email.

Other Sportsbooks Making Plans

DraftKings is planning to enter the market.

“We are committed to working with the Tennessee Lottery throughout the application and licensing process and, pending successful licensure, look forward to offering our top-rated sportsbook to sports fans in Tennessee,” Tim Dent, chief compliance officer at DraftKings, said in an email.

A spokesman for The Stars Group said in an email that it “intends to seek approval to offer our online gaming products in Tennessee. We will provide more information in due course.”

Kindred Group, through its brand Unibet, is considering Tennessee and any other state where it can grow. It currently holds licenses in Pennsylvania and New Jersey.

”Kindred Group truly believes in the importance of the U.S. market,” the Kindred Group said in a statement. “As of now we will continue to explore and invest in growing our U.S. operations where market conditions support a sustainable business model. We are excited to extend our U.S. footprints.”

Kevin Hennessy, director of publicity at FanDuel, said the company does not comment on the application process.

The hold was one of the main issues in the initial draft regulations posted last fall. Controversy erupted when initial draft regulations were released by Tennessee in November.

The high hold is bad for consumers because the sportsbooks will have to guarantee the money won, which in turn could affect betting lines. In addition, the hold could limit which operators want to do business in Tennessee, especially if other states don’t have such a requirement.

After undertaking a long process since Tennessee’s sports betting law took effect in July 2019, lottery officials said they expect to be ready to take the first legal sports bets when sports resume nationwide. Tennessee will the first all-mobile market in the U.S. Brick-and-mortar casinos and racetracks are still prohibited in the state.

Mandatory Hold Requirement Issues

Besides wondering if sportsbooks would be turned off by the hold requirement and not enter the market, other problems could arise from it.

A comprehensive study by industry analysts Eilers & Krejcik Gaming, which was commissioned by the iDevelopment and Economic Association (iDEA), showed that the initial hold would cut into revenue Tennessee could see from sports betting, calling the proposal "fundamentally flawed policy.” The report identified these major issues with the hold requirement:

  • A minimum hold requirement will result in sportsbooks offering substandard odds.
  • Sportsbooks may have to further worsen odds to help balance risk.
  • Sportsbooks will have to avoid large payout liabilities (e.g., big-pay parlays and futures or similar jackpot bets) to stay within the hold requirement.

The study also suggested that bettors would travel to other states to bet or, even worse, use illegal offshore sites for wagers. Sherman of 888 Holdings said he doesn’t think people travel to bet in large numbers.

“When you want to build and market a recreational, fan-based sportsbook you’re competing with other entertainment destinations,” he said. “You need to get a lot of people who have never placed a legal bet, or have only done so when they visited Las Vegas, to trust you and bet with you. If they end up losing their money too quickly they won’t enjoy it.

“The way to counter that is to offer a superior product experience that could offset the high hold.”

Now that operating regulations have been set and applications for licenses are available, sports betting is coming to Tennessee. An optimistic goal would be to have the market in place when sports return, maybe as early as July. Lottery officials would love to ensure it is ready for football season.

But which sportsbooks will be there for the start?

Betting News Articles

Latest Betting News

DISCLAIMER: Online Wagering is illegal in some Jurisdictions. It is your responsibility to check your local regulations before playing online. GDC Trading Ltd takes no responsibility for your actions.
© 2011-2020 KAX Media America Inc. All rights reserved. Registered with the New Jersey Division of Gaming Enforcement with Vendor ID #90927.
Terms and Conditions  |   Privacy Policy

Asset 4 Android GET IT ON facebook Download_on_the_App_Store_Badge_US-UK_RGB_blk_4SVG_092917 twitter
×