New Tennessee Mobile Sports Betting Law to Take Effect July 1st

Tennessee is on the verge of becoming the latest state to legalize sports betting. A bill that seeks to authorize mobile betting has made it through successful votes in both chambers and has now been sent to the desk of Governor Bill Lee for his final approval.

After passing a House vote last month, HB 0001 was sent to the Senate for further debate and another vote. The Senate approved the bill by a vote of 20-12 just a few days later. The House and Senate speakers added their signatures earlier this month and the bill was sent to Governor Lee on May 14th.

The Governor has ten days from there to make a decision but has since said he intends to allow the bill pass into law without his signature. That puts May 24th as the day the bill will become law.

From there, things will continue moving at a brisk pace. HB 0001 is set to take effect on July 1st, 2019. The actual start date of sports betting in TN may vary depending on how long it takes regulators to review and issue licenses.

Governor Lee is not a big fan of gambling expansion but says he’s willing to abide by the wishes of the majority if mobile sports betting is what fellow lawmakers want. Governor Lee’s press secretary Laine Arnold put it this way:

“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. He plans to let this become law without his signature.”

Online Only Sports Betting in TN

While other states have authorized retail sportsbooks but not mobile betting, Tennessee is taking the exact opposite approach. Tennessee does not have any casinos and lawmakers stripped language from the bill that would have allowed in-person betting via kiosks and at other locations.

Not having retail sportsbooks will put a bit of a damper on the industry’s potential, but not to the same extent as we would have seen the other way around (authorizing in-person betting but not mobile betting). New Jersey allows both form of betting and now takes roughly 80% of its wagers via betting sites and mobile apps.

HB 0001 has undergone multiple significant changes since it was first introduced back in 2018:

  • Licensing fee of $7,500 per year was raised to $750,000 per year
  • Added an annual application for renewal fee of $50,000 per year
  • Removed approval for sports betting kiosks to make this law online-only
  • Sports betting tax increased from 10% to 20%
  • Requires sports betting operators to purchase data from the leagues in order to settle in-game wagers
  • Removed the requirement that customers register for mobile sportsbooks in-person; customers may now sign up online
  • Removed a provision that would have required voter approval in each jurisdiction before allowing sports betting in that jurisdiction
  • More changes noted on page three here

Money raised by the 20% sports betting tax is to be divvied up and earmarked as follows:

  • 80% for public education
  • 15% for local governments
  • 5% for mental health and substance abuse services

Fiscal notes attached to the bill estimate the law will generate more than $50 million in additional tax revenue for Tennessee starting in the 2021-2022 fiscal year. Of that amount, about $40.7 million would go to public education, $2.5 million for mental health and substance abuse services and $8.7 for college scholarships. Tennessee also estimates an additional $7.6 million in new local revenue.

The state also anticipates 15 operators applying for licenses in the first year and about 12 each year thereafter seeking renewal to generate about $9 million a year in licensing fees.

DraftKings Coming to Tennessee

News Channel 11 reported this week that DraftKings “absolutely” intends to launch sports betting in Tennessee and wants to be there on the very first day. DraftKings stands to quickly become one of the leading TN sportsbooks if it does indeed manage to launch on day one, especially with its existing fantasy userbase that should easily convertible to sports betting.

DraftKings Sportsbook also operates in New Jersey and has done very well there as one of the leading betting apps by revenue. The New Jersey Division of Gaming Enforcement does not provide financial statistics for each betting site by name, but DraftKings is associated with Resorts AC and Resorts consistently crushes the competition in terms of revenue.

It will still be some time before we have a start date for DraftKings Tennessee, but the company has been a fast-mover in other states that have legalized sports betting. The odds are DraftKings will be ready to rock as soon as regulators give them the green light.