Tennessee saw a vastly improved year-over-year handle as sports betting continues to thrive in the Volunteer State, well over three years since its initial launch.
Betting Frenzy
Most states see a significant decline in handle from April to May when the sports betting options are fewer but Tennessee saw just a narrow dip from $384.2 million in April to $381.8 in May. The handle is the most significant metric to the Tennessee tax collectors as they switched from a 20% cut of the sportsbooks’ adjusted gross revenues to 2% of the handle last year.
Last year’s May handle was $279.1 million, which is over $100 million less than this year. The state has reaped its fair share from the sports betting industry, as evidenced by the $240 million the tax coffers have seen since the advent of mobile sports betting in November 2020. There are now 1.5 million active accounts in Tennessee and over $13.25 billion in wagers have been placed since the onset of licensed sports betting in the state.
Balancing Act
Mary Beth Thomas, executive director of the Tennessee Sports Wagering Council, noted the increase in sports betting and the rise in the number of accounts, saying, “That provides a lot of scholarship money and a lot of help to local governments that would like a boost to their funding for important projects that they have.”
The money collected by the state is allocated as follows:
- 80% of the sports betting tax funds the HOPE Scholarship.
- 15% of the sports betting tax supports local governments for infrastructure projects and emergency services.
- 5% of the sports betting tax is earmarked to the Tennessee Department of Mental Health for responsible gaming programs and resources.
“I think that Tennessee has done a great job at balancing the interest in sports wagering and our need to regulate it in a fair and transparent manner so that Tennesseans have comfort that the sportsbooks that are licensed by the state of Tennessee are adhering to the law and doing the right thing,” Thomas said.
Not So Zen
Reserve accounts are a very important aspect of operating a sportsbook. If every bet hit, that general account coupled with a reserve account must have enough money to pay out all the wagers. And it is for that reason alone that regulators take reserve accounts quite seriously.
ZenSports found out what happens when regulators catch accounts short, something that happened on three occasions in December to the Miami-based bookmaker. Reserve accounts must be at or above the required minimum and at a May 10th meeting of the Tennessee Sports Wagering Council (SWC), ZenSports was fined $60,000 for the infractions.
An SWC spokesperson issued the following statement:
“Licensees also shall maintain a reserve in the form of cash, cash equivalents, irrevocable letter of credit, in addition to the above-referenced Bond, of not less than the amount necessary to ensure the ability to cover the outstanding liability related to the Patron accounts. The outstanding liability shall be the sum of the following amounts: 1. Amounts held by the Licensee for Sports Gaming Patron Accounts; 2. Aggregate amounts accepted by the Licensee as Wagers on Sporting Events with outcomes that have not been determined; and 3. Amounts owed but unpaid by the Licensee on winning Wagers.”
ZenSports has not been in violation since that time.
