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Will There Be a New Rule Signed Into Law During This Year’s Legislative Session in Tennessee Regarding the Mandatory 10 Percent Hold Rate

Tennessee is a crucial contributor to the sports betting industry. Still, there could be some changes on the way as the legislators in the Volunteer State are taking it into consideration. States like North Carolina and Georgia, which are in the process of legalizing sports betting in their respective states, are looking to join the industry.

Will the Lawmakers Make Amendments to the Controversial Rule?


Visitors who drive to Tennessee don’t have to stay at a casino because the state only offers online sports wagering to its consumers. However, since the launch began, the sportsbook operators have had to abide by an odd rule that isn’t implemented in any other jurisdiction.

According to the rules signed into law, online bookmakers are required to hit the benchmark of a 10 percent hold rate each month. When these platforms don’t reach or surpass the mark, the platform is subject to fine.

Surpassing a 10 percent hold rate for the most part is an arduous task because every monthly handle report fluctuates. Some months, the house destroys the public, while other months, either side has the advantage. There are quite a few unique propositions that are circulating the state as the tax receipts numbers would change drastically.

By replacing the 10 percent win rate rule with a 1.85 percent monthly tax, HB 1362 would essentially eradicate the win rate ruling. In contrast, in SB 475, a similar bill in the Tennessee Senate, taxes would be set at two percent in the state. In addition to the hectic changes, there is currently a 20% tax rate on Tennessee’s adjusted gross revenue.

A House Finance, Ways and Means Subcommittee hearing on Wednesday pushed HB 1362 to the bottom of the pile of bills to be heard. Potential changes concerning the sports betting operation in the state during the ongoing legislative session didn’t necessarily warrant a check mark as urgent.

Why Was This Brought Up in the First Place?


Reaching the 10 percent hold rate on the regular isn’t an easy thing to do. The industry’s average win rate on a national level is approximately 7.2 percent.

To work around the system, operators took the initiative to just pay a small $25,000 fine, which is nothing, as their monthly handles exceed millions of dollars every month.

Members of the Tennessee Sports Wagering Advisory Council (SWAC) were frustrated because the tax receipts go towards funding programs, such as education. The SWAC estimated that the preferred acceptance of the fine would result in about $10-12 million in unrealized tax revenue for the state.

What Routes Has the SWAC Considered?


The SWAC considered many avenues, like temporarily suspending the sportsbook license for missing consistently or another route that involved adding more fines. Moreover, the commission may just put a two percent tax on the handle.

Tennessee is home to the “Big 4”, which includes FanDuel, DraftKings, BetMGM, and Caesars. Having a strong betting market will generate large amounts of revenue on a monthly and yearly scale.

SuperBook Sports and Betly recently petitioned the SWAC to require NFL wagering to use official league data sources. The SWAC deferred the decision to the legislature, which amended HB 1362 and SB 475 to repeal the state’s official league data mandate.

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