Betting on big returns: Legalized sports gambling kicks off online in Tennessee

Online sports betting in Tennessee went live on Nov. 1, and the results from the first month were the single largest debut month of any U.S. state with legalized gambling, according to PlayTenn.com.

Amid the craziness of a sports world that included a Masters tournament in November, a tenuous and fluid college football season, and drastic drops in TV ratings across all sports because of COVID-19, the state of Tennessee handled more than $131 million in sports wagers in its first month of legal betting.

“Our first month of sports wagering in Tennessee comes at a unique time in the world, let alone the sports world,” Tennessee Education Lottery President and CEO Rebecca Paul Hargrove says in a statement announcing the $131,444,523 in online betting.

“November’s figures include adjustments and indicate potential. It is only one month in an unpredictable and extraordinary year, making it difficult to begin extrapolating out from this single month,” she says. “As this new industry in Tennessee evolves, we will continue to work with licensees and registrants in support of a responsible and competitive sports wagering program.”

Tennessee bettors won more than $118 million on correct wagers, the state’s four online partners netted $13,224,908, and the state received its 20 percent — $2,363,918 — on the money made by the online operators TN Action 247, BetMGM, DraftKings and FanDuel.

“We believe there is a huge opportunity in Tennessee in terms of betting and the economic reach,” FanDuel Chief Marketing Officer Mike Raffensperger said before the Nov. 1 launch. “That’s not just in terms of the excitement or even the state’s increased revenue when you think about the potential for tourism, too, from out-of-state bettors to come watch games and at venues and restaurants.”

The taxes collected will be paid quarterly, with the division of the state funds as follows, according to the Tennessee Education Lottery website:

* 80% of the tax collected will be transferred to the state treasurer for deposit into the Lottery for Education Account.

* 15% will go to the state treasurer for deposit into the General Fund to be remitted quarterly to local governments on a per capita basis.

* 5% will go to the state treasurer to be allocated to the Department of Mental Health and Substance Abuse Services to oversee grant programs for problem gambling treatment services.

The first month of Tennessee legal wagering compared favorably to November 2019 in Indiana, that state’s first month of online betting, according to the analysis by TNBets.com, a Nashville-based website that covers the betting industry.

Indiana, which has a similar population size to Tennessee, had about $100 million in online bets that month, with three online options. A year after that 2019 online launch in Indiana, the state had $251.4 million in betting in November 2020.

Tennessee also had almost double the betting money handled in November 2020 as did Iowa, which had more than $68 million wagered — and Iowa has had legalized betting for more than a year.

Brett Smalley, editor and founder of sports wagering industry publication Sports Handle, predicts a 2021 peak in Tennessee will come in September when the next football seasons kick off. He says he expects the handle, or the amount of money in wagers accepted, will approach $350 million, and state tax revenue — at 20% of gross gaming revenue — will be about $7 million for the month.

“I think the biggest story of 2021 will be the sheer growth of the market alone during 2021 — the betting handle, operator revenue, and corresponding state tax revenue,” Smalley says. “It probably will at least double during its first calendar year in 2021 from where it started in November.”

The state of legalized sports betting

Tennessee is one of 19 states — along with the District of Columbia — that have sports betting avenues. Three other states — North Carolina, Virginia and Washington — have legalized sports betting, but are in the procedural stage and awaiting their first bets.

There already are three more online partners — William Hill, WynnBet, and BetAmerica operated by Churchill Downs — in the application process to join the field of options for interested players, and Smalley believes there could be as many as 10 by the start of the 2021 football season.

Those lofty expectations echo what national analysts have projected since the legislation was enacted in Tennessee in the middle of 2019.

“The Oxford study put the annual handle for Tennessee at $4.5 billion,” legalized sports betting expert Daniel Wallach says in reference to the projections commissioned by Oxford Economics, a global consulting firm. “Sports betting is expected to generate more than $50 million in annual tax revenue for the state.”

Wallach started Wallach Legal LLC, the nation’s first law firm dedicated to the legalization of sport wagering in states across the country. He is a co-founding director of the University of New Hampshire School of Law’s Sports Wagering and Integrity Program, the nation’s first law school certificate program dedicated to the study of sports wagering and integrity. He also covers sports gambling and legal issues for The Athletic.

And he predicted Tennessee’s strong start the even before the first bet was made.

“It’s such a great sports market,” he says. “There’s so much passion with college football, the Titans are on a roll, the Grizzlies, there’s great interest.”

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