Tennessee Sports Betting Handle, Tax Collections Jump in March

The Tennessee Sports Wagering Council (SWC) announced that the state collected $473.5 million in gross wagers in March, up by almost 25% from February’s collection of $380.3 million.

After accounting for adjustments in wagers, the SWC reported that the Volunteer State managed $472 million in sports betting handle. March’s handle was the third-best in the state’s betting history.

The SWC’s report added that Tennessee collected $8.71 million in tax receipts from the state’s gross handle tally. Tennessee has a unique method of taxing sports betting, which includes levying a 1.85% tax on handle instead of revenue. As a result, the SWC does not disclose individual operator data, which makes the comparison to the traditional tax regime on gross gaming revenue quite unpredictable.

TN Steady Year-On-Year Growth

Irrespective of speculative tax forecasts, the tangible metric of comparison in the Tennessee sports betting industry is handle, which has grown steadily for the last few years. March’s betting handle of $473.5 million is more than 20% up from last March’s tally of $392.6 million.

In the first quarter of the calendar year, Tennessee has already reported a record-breaking handle of more than $1.3 billion in betting handle. The state also collected record handles in January ($467.4 million) and February ($380.3 million).

In 2023, the state took in $4.3 billion in handle and $83.6 million in tax collections at a hold rate of 10.6%. In 2022, Tennessee managed $3.83 billion in sports betting handle, at a hold rate of just below 10%. Total tax revenue in 2022 was $68 million, which was almost double that of 2021’s total of $39.3 million in tax receipts.

Based on projections from this year’s data and the patterns observed across the last few years of betting, it seems like Tennessee’s upswing will continue well into 2024 as well. The Volunteer State could easily see betting handle cross $5 billion this year.

TN Tax Collections Could Also Improve in 2024

Tennessee has not seen a month with double-digit tax collections yet but that does not seem far away. In Nov. 2023, the state collected $9.5 million in tax on handle of $517.1 million, which was a record for Tennessee.

That momentum was taken into the next few months, with $9.1 million in tax collections in December last year on handle of $495 million. After wagers dropped a bit in January to $465.8 million, Tennessee managed $8.6 million in tax, which dropped even further to $6.9 million in February on a handle of $380.4 million.

Those consecutive months of dips in tax collection were halted by a strong March for the state. While an increase in handle will always increase tax receipts proportionately due to the state’s tax structure, there could be a case to consider if taxing operators based on revenue could reap Tennessee a higher tax outlay.

Considering a hold rate of around 10%, which has been the approximate average for Tennessee in the last two years, the state’s operators may have collected close to $50 million in gaming revenue. Even accounting for promotional deductions, which several states allow, taxable gaming revenue may have stood above $45 million. When taxed at the previous rate of 20%, that would have brought in close to $10 million in revenue, which surpasses the tax receipts for March under the present regime.

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