Home to country music, whiskey, and hot chicken, Tennessee is set to join Mississippi as one of the first states in the south to offer sports betting. A little less than a month ago, the Tennessee legislature passed Senate Bill 16. Tennessee online sports betting was then earmarked to become law without a signature from the Governor’s office.
“The governor has said he does not believe that the expansion of gambling is best, but he recognizes that many in the legislature found this to be an issue they want to explore further,” Governor Bill Lee’s Press Secretary Laine Arnold told the Tennessean. “He plans to let this become law without his signature.”
This held true on May 24, 2019, when Lee confirmed his intentions via Twitter:
Tennessee made itself the ninth state to pass sports betting legislation since the Supreme Court overturned the ban on sports wagering outside Nevada, the Professional Amateur Sports Protection Act, commonly referred to as PASPA, in May 2018. While it’s a good start in a new and rapidly expanding industry, the bill lacks the kick you might get from Hattie B’s Hot Chicken. Here’s a look at the good, the bad and the ugly of Tennessee online sports betting:
The Good – Online Betting and Registration
Tennesseans should be able to bet online by football season. In fact, bets will only be accepted online and on mobile apps, as Tennessee became the first state in the country to pass an online-only sports betting bill. Tennessee does not have casinos, and casinos won’t find a home in the Volunteer State anytime soon. Instead, bettors will be able to wager anywhere in the state via phones and computers, with Tennessee mobile sportsbooks that decide to operate in the newly legalized jurisdiction.
Mobile-interactive wagering is where it’s at in terms of revenue. Sure, there’s a certain aura inside a physical sportsbook, but the vast majority of bets take place outside of cool, air conditioned rooms with betting windows and big screens. Unlike states that limit sports betting to brick-and-mortar sportsbooks, such as Delaware and Rhode Island, Tennessee’s bill allows operators to quickly offer legal sports betting to consumers once the law becomes effective on July 1st.
Pennsylvania learned what life was like without mobile wagering the hard way. In their first year of legalized sports betting, the state struggled to compete with nearby New Jersey, in large thanks to the absence of sports betting apps. Pennsylvania legalized online wagering last year, but the state’s January interpretation of the DOJ Wire Act delayed the implementation of mobile wagering, costing the state millions of dollars of revenue. The good news is that online wagering is imminent and will be introduced in Pennsylvania any day now.
Currently, New York is debating adding mobile and online sports betting to their already approved legislation that allows for sports betting at four private, commercial casinos upstate.
Additionally, Tennessee was able to avoid requiring in-person registration after amendments were made to the initial version of the bill, which also called for in-state betting kiosks. The changes will increase revenue from tourists who will be able to register from their phones as soon as they cross the state line. With neighboring states such as Kentucky and Alabama still resisting the push for regulated sports betting, Tennessee estimates 3.5 million tourists each year – possibly more – will contribute to the state’s sports betting handle.
The Bad – No Prop Betting
After an amendment was added by Rep. Bob Ramsey on behalf of the University of Tennessee and Vanderbilt, the law will prohibit prop betting on collegiate sports. Prop betting, especially on college sports, is generally a pretty small market as is, so it’s only a minor hiccup in the grand scheme of things. While New Jersey completely bans betting on in-state college teams, this is the first full-out ban on college props. At least Tennesseans can still back the Vols come football season.
The Ugly – Licensing Fees and Mandated Data Purchases
While mobile wagering and online registration help pave the road for a quick supply of legal sports betting options, Tennessee’s operating fees serve as a major impediment. The annual licensing fee for sportsbook operators was raised from $7,500 to $750,000 in the final version of the bill. The fee is a tall barrier for smaller operators that lack the market share of more prominent names like DraftKings Sportsbook and FanDuel Sportsbook. The fee stifles competition, hurting consumers over the long run.
Up until the passage of Senate Bill 16, leagues had failed in their attempts to lobby legislators to mandate the purchase of league data. The leagues found their first victory in Tennessee. Now sportsbooks will be forced to buy league data to grade out live in-game wagers.
Citing “integrity concerns,” the sale of data is one way sports leagues hope to profit from regulated sports betting, brewing controversy between leagues and operators. It is still unclear how monopolizing data would alleviate integrity concerns, though. In fact, one could make the case that it actually exacerbates the likelihood of foul play.
Overall, Tennessee was wise to enact legislation sooner rather than later, and they should be applauded for jumping on the opportunity to allow online sports betting while excluding in-person registration requirements But if Tennessee’s excessive fees, prop betting ban and data mandate show anything, it’s that lawmakers still have a long way to go in understanding the online sports betting industry.