Tennessee’s sports betting market is one of the states that has a mobile-only market in the industry. However, could changes be coming because the jurisdiction has a strict rule concerning reaching the 10 percent hold rate?
What is the Specific Rule in the Volunteer State?
Sportsbook operators that accept wagers in Tennessee must meet a certain quota to avoid a fine. This rule pertains to the hold rate of 10 percent in the state. A bookmaker who fails to meet the quota will be fined 25,000 or the difference between what they would have paid had they adhered to the hold.
Reaching the benchmark or surpassing the 10 percent rate isn’t necessarily an easy task to accomplish because every month has different external factors. It’s common for sportsbooks to miss that mark, as was evident in Tennessee. The list included Tennessee Action 24/7, Barstool Sportsbook, BetMGM, Betly, Caesars Sportsbook, DraftKings, SuperBook Sports, Wagr, and WynnBET.
How Much Potential Revenue Did Tennessee Miss Out On?
The bookmakers opted for the obvious choice, which was paying the 25,000 fine. Even though the state collected $68 million in tax revenue last year, the Sports Wagering Advisory Council (SWAC) calculated that the state missed out on $11 million in unrealized revenue because the operators failed to reach the mark.
Billy Orgel, chairman of the Commission stated, “That’s $11 million that 15% of it didn’t go to the municipalities spread out, 5% didn’t go into responsible gaming, and the other 80% didn’t go to our students for scholarships and other things.” All things considered, that is a lot of money that is left on the table.
Could Any Amendments Be Coming in the Future?
The basic rule in the business world is to maximize the potential revenue, and in this case, it would be tax revenue for the state. The council is expected to meet on March 1st to discuss this issue in further detail, which could result in harsher measures going forward.
According to SWAC council member John P. Valliant Jr. The issue will be brought up every year until it’s resolved. A drastic measure of suspending the operator’s license could happen if the goal isn’t met by the operator.
The members of the Commission seem to be set on adding more fines that repeatedly fail to meet the 10 percent win rate compared to the platforms that miss the mark for the first time. There’s a case to be made that these changes will only cause more problems between the two sides moving forward.
John P. Valliant Jr. made another crucial point about the matter. He stated, “If I have a choice between paying $1 million or paying $25,000, I’m gonna take the 25 every time if nothing is gonna happen to me.” Despite this, the operators in the state will not accept these changes without challenging these potential measures.
The sportsbooks may threaten to offer worse odds to the customers who place wagers. The same books may offer a -110 line in other states and would most likely move to -115 or -120 in Tennessee.
