Tennessee is one of several states that will begin sports betting in 2020. People in the state will be able to place a wager anywhere within the state lines on a betting app on any internet-connected device. The law is regulating the online sports betting market, so there are no plans to have any physical sportsbook locations.
The Tennessee state legislature approved the bill in April 2019. Governor Bill Lee said he would allow the bill to become a law without his signature. Now the Volunteer state hopes to have sports wagering apps up and running in July.
The Minimum Hold
One rule that is going to hurt the market is the minimum hold that has been put in place. Tennessee is capping payouts at 90% with a 10% minimum hold. No other state in the country requires a minimum hold for sports betting.
The historical betting hold in Nevada is only 5.4%. After much backlash, the Tennessee Education Lottery Board of Directors lowered the hold to 8%. However, when the final rules came out, it was at 10%.
Legal Sports Report says, “A study released by gaming analyst Eilers & Krejcik in January projected that the original 15% hold could cost Tennessee $11 million in annual state tax revenue and decrease the number of operators that apply for a license by more than half.”
The problem with this is that states still have to compete with bordering states and illegal markets. With this rule in place, bettors are going to feel better placing their wagers in other markets.
One of the only places that this is comparable to is France, which also puts a large minimum hold on sports betting. Their numbers have not been where they wanted.
“While the state could conceivably raise the (90%) cap at some point in the future, it would be difficult to lower once expectations were set,” a spokesperson for Lt. Gov. Randy McNally told the AP.
Once Tennessee goes live, they will be joining New Jersey, Pennsylvania, Indiana, West Virginia, New Hampshire, and soon Colorado as states that offer full mobile betting.
Arkansas, Delaware, Illinois, Iowa, Michigan, Mississippi, Montana, Nevada, New Mexico, New York, Oregon, and Rhode Island have legal sports betting, but they either allow for only in-person wagering, limit your online betting to when you’re inside a casino, or require you to register for an online betting account. Of these, Delaware and Mississippi are the only states that exceed a 10% hold.
Potentially Successful Market
Hopefully Tennessee can figure out the minimum hold and succeed in their attempt to profit from sports betting. Their market, especially Nashville, is a growing scene where sports wagering could flourish. The Tennessee Titans and Nashville Predators are two professional teams that have had success of late.
The coronavirus has created a time where they could potentially ease into the transition, not seeing too high of numbers out of the gate. Maybe that will allow the board to consider some changes moving forward.
