Tennessee legal sports betting
Legal Developments

It’s Official: Sports Betting is Legal in Tennessee

Governor Bill Lee has allowed HB 0001 to become law without his signature to officially legalize sports betting in Tennessee. This makes Tennessee the first state in the Union to pass an online-only sports betting bill.

The Governor issued a brief statement on Twitter explaining his reasoning for allowing the bill to pass without his signature:

“I am letting House Bill 0001 become law without my signature.

“I do not believe the expansion of gambling through online sports betting is in the best interest of the state, but I appreciate the General Assembly’s efforts to remove brick and mortar establishments. This bill ultimately did not pursue casinos, the most harmful form of gambling, which I believe prey on poverty and encourage criminality.

“Compromise is a central part of governing, but I remain philosophically opposed to gambling and will not be lending my signature to support this cause. We see this issue differently but let me be clear: any future efforts to expand gambling or introduce casinos in Tennessee will assure my veto.”

Tennessee the First State to Pass a Mobile-Only Bill

Other states have passed laws authorizing in-person sportsbooks only or in-person and online betting, but none have passed a law exclusive to online betting until now. Tennessee took this approach because the state has no land-based casinos that would normally serve as the hosts of retail sportsbooks.

The new law also differs from laws passed in other states in that it does not require online betting operators to have an existing gambling license. This free market approach will allow companies such as DraftKings, FanDuel and others with gaming experience to enter the TN market and compete on the basis of their product rather than on their connections with existing gambling operators.

Tennessee has set an industry tax rate of 20%, which is higher than laws passed in other states barring Pennsylvania (36%), Delaware (50%) and Rhode Island (51%). Still, the 20% tax in Tennessee should allow the industry to function and remain competitive with unlicensed offshore betting sites.

Key Changes to the Sports Betting Bill

The TN sports betting bill called for in-person betting kiosks at one point, but that language was stricken from HB 0001 during negotiations. As it stands now, Tennesseans will have statewide access to mobile betting apps that will accept a full range of wagers.

Two other key provisions were removed from the bill to make it more convenient for customers. One provision called for a statewide referendum in which voters of each jurisdiction within the state would have decided whether or not sports betting should be legalized where they live.

Another would have required customers to register for mobile betting accounts in-person to verify their identities before being allowed to place wagers online. Both provisions were removed from the bill before it was sent to Governor Lee’s desk.

Lawmakers also amended the bill to require sports betting operators to purchase official data from the leagues in order to settle in-game wagers. This means betting apps that offer in-game wagers such as the outcome of the next pitch in an MLB game must use data provided by the league in order to determine the outcomes of those wagers.

Yet another amendment was added late in the process prohibiting prop bets on college games. Tennesseans can still bet on their favorite college teams, but there will be no betting on the color of the Gatorade that will be poured over the coach’s head after a big game.

What Happens Next in Tennessee

The Tennessee sports betting law is scheduled to take effect on July 1st to potentially get things up and running quickly. State regulators also still need to draw up additional regulations, consider licensing requests and actually issue those licenses.

Once that happens, mobile providers will be able to serve customers 21 or older and within state lines. This is when you’ll be able to download the official apps from licensed providers or visit their websites from your desktop to sign up for an account, make a deposit and get to betting.

Sports betting operators will be required to pay annual licensing fees of $750,000, which is quite steep for the state. However, local news has reported DraftKings plans to enter the TN market as quickly as possible. With at least one operator committed to entering the state already, we will likely see additional betting sites join the fray in short order.

For now, it’s just a matter of time before the first TN betting sites go live. We’ll be watching this story closely and providing updates as more information comes out. With the fast timeline specified by the new law, it shouldn’t be too much longer before you’ll be betting on sports through licensed and regulated providers.

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