Tennessee Closing in on Sports Betting Launch

Even though sports have been shut down for weeks due to the coronavirus, that hasn’t stopped lawmakers in Tennessee from working on sports betting legislation to legalize online gambling in Tennessee. Sports betting has been a law since May 2019 after Governor Bill Lee allowed the bill to become a law without his signature.

It has taken lawmakers almost 11 months to come up with the rules that will govern the new sports betting industry, but they have finally been proposed and approved. These new regulations are set to be officially unveiled on Friday, and there is expected to be plenty of controversy.

The Tennessee Education Lottery is the governing body of the new sports betting industry, which will include mobile sports betting. The board of directors of the Tennessee Education Lottery approved the new regulations on Wednesday.

The Sports Wagering Advisory Council also played a role in establishing these new rules. Bettors in the state of Tennessee will not be happy about the fixed payout rate that is to be imposed as a part of these regulations.

Tennessee is set to put a hard cap on the amount of money that a bettor can win in relation to their original stake. A bettor can win no more than 90% of their original stake, which will set the state of Tennessee apart from other states in the industry.

Sportsbooks will be forced to hold 10% of the stake, which is by far the highest in the industry. The state of Nevada currently has a 5-6% hold rate, and the state of New Jersey has set the hold rate at 7%.

Sportsbooks in Tennessee will now require bettors to pay a much larger vig on the wagers. Most sportsbooks and states offer bets at odds of -110 for wagers that have two sides, but sportsbooks in Tennessee will offer wagers with lines set at -125.

This means that it would take a $125 bet to win $100, which would, in turn, force bettors to look elsewhere. Opponents of this regulation will likely argue that keep Tennessee from reaching the projections of revenue that the Sports Wagering Advisory Council has announced.

High Cost

Tennessee could also face some challenges in attracting major sports betting companies due to the high cost of licensing fees. Licensing fees are set at $750,000 with a 10 percent tax rate also imposed.

This would make Tennessee have the third-highest licensing fees in the country, but they are well short of both Illinois and Pennsylvania. Illinois has imposed a $20 million licensing fee, while Pennsylvania charges licensing fees at a rate of $10 million. Indiana, Iowa, and New Jersey have some of the cheapest licensing fees in the industry.

Sportsbooks are still expected to apply for a license in Tennessee, although the coronavirus pandemic could also change some things. Any sportsbook that is interested in applying for a license can begin doing so next week, and the Tennessee Education Lottery will have 90 days to review each application and make a decision.

There are a few other options for licenses, and those licenses come at a much cheaper cost. A level II license will cost $75,000 as well as a nonrefundable $50,000 application fee.

A level II license applies to suppliers in the sports betting industry. The nonrefundable application fee also applies to Level I license applications.

A level III license is also available at the cost of $7,500. A level III license is meant for contractors, subcontractors, and other independent contractors that provide services to companies applying for a higher license.

The Tennessee Education Lottery did announce that these rules and regulations will be revisited after one year of the industry being launched.


Rebecca lives in Las Vegas and after completing her degree at Reynolds Journalism school joined the USGS team to pursue her journalism dreams.