Tennessee Sports Betting Handle Continues on Upward Trajectory

The Tennessee Sports Wagering Council (SWC) has revealed that the sports betting handle for February amounted to an impressive $378.2 million, indicating a continued upward trend in the Volunteer State’s sports wagering landscape, at the start of 2024.

Comparing year-on-year figures, February’s handle saw a significant uptick of 15.6% compared to the same period in 2023. The cumulative accepted wagers for the first two months of this year totaled a noteworthy $844 million, marking a substantial 14.4% increase compared to the same period of last year. However, February’s handle experienced a decline of 18.8% compared to January’s figure of $465.8 million, which stands as the third-highest total in Tennessee’s 40 months of betting history.

In terms of tax revenue, February fell just shy of the coveted $7 million mark, showing an increase of over $600,000 compared to the previous year. However, it represented a decrease of $1.6 million from January’s figures.

Notably, Tennessee adopts a unique approach to taxation, levying a 1.85% tax on gross handle rather than revenue, making it the only state with legal sports betting to employ such a method.

Although the Sports Wagering Council does not collect operator revenue data, making a direct comparison challenging, the state’s tax revenue has shown promising growth since the implementation of the new taxation system at the start of Fiscal Year 2024 last July.

With $58.5 million in tax revenue generated in the first eight months, Tennessee’s sports betting market appears to be thriving under the revised tax structure.

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Tennessee’s Unique Taxation May Yield Long-Term Benefits

Furthermore, hypothetical analyses suggest that Tennessee’s current method of taxing handle may outperform the previous system of taxing adjusted gross revenue (AGR) at a rate of 20%. By leveraging a collective win rate of 7.52% observed in other states like New York, West Virginia, Montana, and Maine, Tennessee’s handle-based taxation method could potentially yield higher tax revenues compared to the AGR approach.

In Tennessee’s bustling sports betting landscape, heavy hitters like FanDuel, DraftKings, and BetMGM have long dominated the scene since the market’s inception in Nov. 2020. These industry giants set the stage for a competitive environment that has only intensified over the past three years with the addition of various other operators.

One notable newcomer to the Tennessee market is Fanatics Sportsbook, which made its debut in Aug. 2023, further diversifying the options available to bettors. Joining the ranks is ESPN BET, which entered Tennessee as part of its expansive launch across 17 states, solidifying its presence in the Volunteer State.

Hard Rock also made a significant impact upon its launch in Sept. 2022, leveraging its brand recognition and existing establishments within the state to attract bettors to its platform. With three Hard Rock Cafés already established in Tennessee, the brand’s foray into sports betting was a natural progression.

Another key player in Tennessee’s sports betting landscape is Caesars Sportsbook, operating in partnership with the Memphis Grizzlies since Aug. 2022. This strategic alliance not only enhances the offerings available to Tennessee bettors but also strengthens the ties between sports betting and the local community.

As the competition among operators continues to heat up, Tennessee’s sports betting market remains dynamic and diverse, offering bettors a wide array of choices and experiences. With established industry leaders and emerging contenders vying for market share, the stage is set for continued growth and innovation in the state’s sports betting industry.

New Revenue Figures Fail to Outperform Dec. 2023

The Tennessee Sports Wagering Council reported a robust sports betting handle of $465.8 million for January, marking the third-highest total in 39 months of legal betting in the Volunteer State. This figure represented a 13.4% increase from the previous January and a 5.6% decrease from December’s record-setting total of $493.3 million.

January kicked off with the University of Tennessee’s resounding victory over Iowa in the Citrus Bowl, providing a boost to sports betting activity in the state. Additionally, the presence of two top 10 men’s college basketball teams, Tennessee and Memphis, further fueled interest in wagering. Despite these factors, tax revenue fell just short of $8.6 million, reflecting Tennessee’s unique taxation method, which applies a 1.85% levy on sports betting handle rather than revenue.

The Council’s decision to stop publishing monthly operator winnings data since July hinders a direct comparison of taxation methods. Given the success of operators in other states, it’s conceivable that Tennessee may have missed out on potential tax revenue.

Applying the average win rate of 11.4% from the first eight reporting states in January suggests potential revenue of $51.8 million, which, if taxed at the previous rate of 20%, could have resulted in $10.4 million in taxes, surpassing the actual tax receipts from handle.

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About the Author
Nikhil Kalro

Nikhil Kalro

Nikhil Kalro covers the sports betting industry and revenue reporting at Gaming Today. Much of his work analyzes state revenue information, including betting activity and revenue for individual states and sportsbook operators. In addition, Nikhil provides news updates on the gambling industry itself, including product launches and legal issues. Nikhil’s previous experience includes five years with ESPN.

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