New Tennessee sports betting tax to enter force on July 1

Tennessee governor Bill Lee has signed Senate Bill 475 into law.

US.- Tennessee governor Bill Lee has signed Senate Bill 475, which will tax operators’ sports betting handle rather than gaming revenue. The law will come into effect on July 1 and makes Tennessee the only state in the US to have such a tax regime. 

The new system will tax legal online sportsbooks 1.85 per cent of their handle. Tennessee currently collects 20 per cent of the industry’s net operator revenue in taxes. 

Some 80 per cent of the taxes collected from sports gambling goes to education, 15 per cent to the state for distribution to local governments and 5 per cent to mental health programmes.

The new legislation also replaces the flat $750,000 licence renewal fee for operators with a tiered system, ranging from $375,000 to $750,000 based on operator revenues. It will also eliminate the required 10 per cent hold for sportsbooks. State regulators requested this change after determining that nine of 11 sportsbook operators in Tennessee did not meet the 10 per cent hold requirement in 2022.

The law makes several other changes, including renaming the regulatory agency from the Sports Wagering Advisory Council to the Sports Wagering Council. It faced little resistance as it moved through the legislature, clearing the state House on a 75-7 vote in April and gaining unanimous approval in the state Senate.

Tennessee sports betting handle reaches $318m in April

Bettors in Tennessee wagered $318m on sports in April, according to Tennessee’s Sports Wagering Advisory Council (SWAC). That’s a decrease of 18.9 per cent from March’s $392.6m, but an 8.7 per cent improvement from April 2022’s $292.8m.

Gross payouts declined 18.1 per cent to $284.1m, compared with March’s $347.1m, but up 7 per cent year-on-year (April 2022: $265.6m). Adjusted gross income for the month totaled more than $32.1m, a 26.4 per cent drop from March’s $43.7m but up 38.4 per cent from April 2022 ($23.2m).

The state’s monthly privilege tax exceeded $6.4m, down 26.4 per cent from March’s $8.7m and up 38.4 per cent year-on-year. 

Under the new system of a 1.85 per cent tax on gross wagers, the state would have collected $5.9m in taxes in April.