Tennessee’s Sports Wagering Advisory Council (SWAC) recently dropped its numbers for March, showing strong and steady growth year over year.
According to the SWAC report, Tennessee’s sports betting operators took in a betting handle of almost $392.7 million during the month of March, leading to total sports betting revenue of $43.7 million and state tax revenue of nearly $8.8 million.
Tennessee Sports Betting Shows Annual and Monthly Growth
The state launched online sports betting in November 2020 and has seen steady growth ever since.
March’s numbers showed a 20% rise in sports betting handle since February. While March is typically a strong month for sports betting with the NCAA March Madness tournament, what stands out about these numbers is the significant growth from last year.
The sports betting handle showed a 6% year-over-year increase. Thanks to changes in hold and adjustments, the gaming revenue was a whopping 92.23% increase from its 2022 total of $22.6 million. State tax revenue increased 92.36% compared to the $4.5 million collected in March 2022.
The SWAC doesn’t report on individual sports betting operators’ revenue like some other states do. Their licensed mobile operators include well-known mobile sports betting apps like Caesars Sportsbook, FanDuel, BetMGM, DraftKings, Bally Bet, and Barstool Sportsbook. Tennessee is the only state with online sports betting but no retail betting available.
Tennessee Sportsbooks Face Different Tax Structure
Tennessee made a name for itself as the only state that allowed mobile betting with no retail sites, but that’s not the only way TN is unique. The state has a one-of-a-kind — and controversial — tax setup for sports betting.
Currently, the state taxes sports betting revenue at 20%, which is fairly middle-ground — a good bit higher than Nevada’s at 6.75% but much lower than New York’s at 51%.
What’s different about Tennessee is it requires all sportsbooks to hold 10% of their handle. The hold is how much sportsbooks keep without paying out promos and bonuses. A typical hold is closer to 5-7% rather than 10%. The 20% tax rate on the 10% hold should guarantee Tennessee a larger tax bump than if the hold requirement didn’t exist.
But sports betting operators in the state have pushed back, claiming the mandatory hold makes it difficult for them to entice bettors with bonuses and competitive odds. They say that offshore and unlicensed books can offer users better perks.
Tennessee Sports Betting Tax Bill Almost Ready for Governor’s Signature
Because of the strong pushback, TN legislators are considering a change to the state’s sports betting tax structure. The bill (SB472) has been approved almost unanimously through the House and Senate and has just one more stop before landing on Gov. Bill Lee’s desk.
If the bill is passed, Tennessee will add another “one-of-a-kind” feather to its cap. The bill proposes taxing sports betting handle instead of revenue. The handle is the amount that bettors gamble in total, while revenue is what the operators keep after payouts, marketing, etc. The new tax rate, since handle is so much higher than revenue, would drop to 1.85%.
No other state taxes sports betting based on handle.
Article contributed by Hannah Vanbiber.
