Tennessee sportsbooks hauled in $420 million in sports bets, the biggest September ever in the Volunteer State and the third largest amount wagered since Tennessee mobile sports betting launched in November 2020.
Betting platforms throughout the country have celebrated the return of NFL and college football and so have the bettors. Tennesseans made this a September to remember as they got down for a whopping $420 million which was a 19.8% increase from last September and 38.7% ahead of September 2021.
Only November and December 2022 saw greater handles with $439.4 million and $440.4 million, respectively. However, revenues this September were not reported because Tennessee has done away with taxing based on revenues and has instead opted to assess a 1.85% on the gross handle. Due to a small number of deductions, the state was able to tax $418 million of the $420 million wagered.
After crunching the numbers, the state collected $7.73 million in taxes in September according to the Tennessee Sports Wagering Council (TSWC). This was the second month since Tennessee switched from its old 20% tax on adjusted gaming revenue with a 10% hold requirement.
The state’s cut was over $1 million less than last September despite the handle being far lower in 2022. The tax collected in August was also lower than the previous August but it is difficult to know how much Tennessee would have collected without knowing the combined revenue of the sportsbooks operating in the state.
Because the sports betting revenue is now irrelevant to the Tennessee authorities, they no longer announce those figures.
If It’s Not Broke, Why Fix It?
There is a reason why all the other states tax the sportsbooks’ revenue and not the handle. It is because they trust professional bookmakers who will do their utmost to win as much money as possible and the state will take their cut based on the books’ expertise in separating a customer’s money from the customer.
It is likely Tennessee has already cost themselves millions in the first two months of this new accounting method and it’s quite likely the sportsbooks won’t be raising a ruckus to bring back the old system. But there were a few more wrinkles to the legislation that changed the tax from 20% on revenue to 1.85% on Tennessee’s sportsbooks’ adjusted handle.
The Old Way
In its previous incarnation, the operators had to purchase official NFL league data from Genius Sports. However, some of the smaller platform providers complained this was an unnecessary expense and one that put them at a competitive disadvantage.
This mandate was eliminated by the legislature and operators may now use unofficial data that will allow them to shed the expense of an official provider.
A two-tier system for sportsbook operators has also been instituted concerning annual license renewal. Those operators reporting $100 million in gross handle the previous year would be required to pony up $750,000. However, for those small providers that handle less than $100 million in total wagers, their annual license fee would be $375,000.
Whether these new financial machinations add more money to the state’s coffers has yet to be seen.