The numbers are in, and Tennessee sports betting enjoyed a strong showing in its first month of operation. On Wednesday, the Tennessee Education Lottery announced more than $131.4 million was wagered in November.
That figure is considered the largest first-month handle by any state since the US Supreme Court ruled on the Professional and Amateur Sports Protection Act (PASPA), although there are some significant caveats to that.
As Rebecca Paul Hargrove noted in a statement, the Volunteer State’s first month came at a “unique time” for sports and the world as well.
November’s figures include adjustments and indicate potential. It is only one month in an unpredictable and extraordinary year, making it difficult to begin extrapolating out from this single month,” she said. “As this new industry in Tennessee evolves, we will continue to work with licensees and registrants in support of a responsible and competitive sports wagering program.”
The lottery reported gross payouts to bettors of $118.2 million.
Differences in Approach Key to Strong Start
As previously noted, the $131.4 million handle is considered the highest of any state since all states were allowed to legalize sports betting. However, the way Tennessee ushered it in was vastly different than most other states.
While most states first opened brick-and-mortar sportsbooks and then moved into online, Tennessee is strictly online only. Other states with multiple license holders – like Pennsylvania, Indiana, and Iowa – staggered the openings of both retail and online operators. In Tennessee, it allowed its first four approved vendors to launch simultaneously on Nov. 1.
Those license holders are: BetMGM, DraftKings, FanDuel, and the Tennessee-only sportsbook Action247. Other entities have applied for licenses.
Still, the first month for Tennessee sports betting puts it behind the second tier of sports betting states. Indiana, which has had sports betting since August 2019, posted a November handle of $251.4 million, and Colorado, which opened its first sportsbooks and mobile apps in May.
Indiana may very well serve as an apt comparison for Tennessee, as the states have similar-sized populations. As new competitors come on board and more Tennessee sports fans become engaged, it’s likely Tennessee will post numbers similar to Indiana in the months ahead.
No Sports Betting Breakdown
The Tennessee Lottery did not break down, like several other states, how each sportsbook performed. So, for now, there is no way to tell who is the top performer. Nor can anyone gauge how upstart Action247 fared against its bigger name competitors.
Similarly, there’s also no way to tell if each of the sportsbooks met the 10 percent hold requirement lottery officials implemented as part of its sports betting regulations. As a whole, sportsbooks took in revenues of $13.2 million. That equates to a margin of 10.1 percent.
Yet, the state reported tax revenue of nearly $2.4 million. Tennessee requires sportsbooks to pay a 20 percent privilege tax off gross revenues. Based on those calculations, gross revenues for the sportsbooks would equal about $11.8 million.
Some in the industry have expressed concern about such a requirement. Typically, margins for most sportsbooks are less than that.
Consider Indiana, again. While its sportsbooks also reported a 10.1 percent hold in November, the hold for the calendar year-to-date is just 7.9 percent. The only other times in Indiana’s history when taxable AGR exceeded 10 percent was in September and October 2019. Those are also the first two months of legal sports betting in Indiana, and before several online operators opened there.
Per Tennessee sports betting regulations, sportsbooks that fail to hit the 10 percent threshold face fines of us to $25,000.
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