Four Tennessee Sportsbooks Almost Cleared for Nov. 1 Launch
David Underwood/Education Images/Universal Images Group via Getty Images. Pictured: Tennessee State Capitol.
As many as four Tennessee online sportsbooks could launch by Nov. 1 and possibly a few days earlier, officials said during a meeting Friday. BetMGM, DraftKings, FanDuel and Tennessee Action 24/7 are literally and figuratively dotting i’s and crossing t’s before one (or all) are cleared to begin legal Tennessee sports betting.
None of the four sportsbooks have completed every requirement to begin accepting bets, Tennessee Education Lottery officials confirmed during Friday’s meeting of the Sports Wagering Advisory Council. Regulators must verify applicants have a completed security assessment, sufficient insurance coverage and gaming technology certification. Several applicants are also awaiting background checks, key employee fingerprints and a few other largely perfunctory regulatory measures.
Additionally, at least one applicant still hasn’t had one of its vendors approved, which will require a special council meeting if it is to go live before the expected statewide launch date. The next regularly scheduled council meeting is Nov. 16.
Still, officials said a few, if not all, of the books should clear these hurdles ahead of the expected Nov. 1 launch date. Officials are hopeful some of the books can at least begin a partial opening in the days leading up to the target launch date, a Sunday, to help them gear up before a full slate of NFL games.
What to Expect When Tennessee Goes Live
Tennessee will be the nation’s first online sports betting market that is fully “untethered,” which means operators don’t have to partner with a land-based gaming facility.
Though an uncapped number of online operators can enter legally, Tennessee still forbids brick-and-mortar sportsbooks. That shouldn’t be an issue for operators; in mature markets such as New Jersey and Pennsylvania, online betting made up more than 80% of total handle, even before COVID-19 shuttered retail sportsbooks.
Though it appears the first four conditionally licensed sportsbooks may not all go live leading up to or on Nov. 1, Tennessee bettors will have plenty of options in the coming months. Officials indicated Friday that three more unspecified operators had already applied for sportsbook licenses. It wouldn’t be surprising to see a dozen or more go live by the end of next year.
That list will include DraftKings, FanDuel and BetMGM, three revenue leaders in most other markets where they operate. Other multi-jurisdictional sportsbooks such as PointsBet, William Hill (Caesars), BetRivers and BetAmerica are also likely Tennessee sports betting candidates. Notably, Penn National didn’t include Tennessee in a recent presentation of the 12 states its Barstool Sportsbook plans to operate in before the end of 2021.
Tennessee is also positioned to be the first market with a “local” online sportsbook. Nashville-based Action 24/7 expects to only take bets in the Volunteer State. The uncapped number of licenses allows other state or regional sportsbooks to enter, but a $750,000 annual fee, a 20% tax on gross gaming revenue and a 10% mandatory hold requirement could discourage other smaller operators.
Long Road to Legal Sports Betting Nears Conclusion
Tennessee’s first legal sports bet will come nearly two years after the bill that legalized sports wagering was introduced.
Lawmakers approved sports betting in April 2019, but regulators took roughly a year and a half to finalize ensuing rules and oversight measures. Even at Friday’s meeting, officials were still reviewing final details, including the catalog of eligible wagering events and restrictions on collegiate prop betting.
The regulatory review process has taken as few as three months in some other states, though none had as much room to cover as Tennessee.
Without any casinos or commercial horse racing tracks (or the political appetite to legalize them), Tennessee had to implement its sports betting bill without the support of traditional brick-and-mortar gaming establishments. The Tennessee Education Lottery, ostensibly the state’s only gaming regulatory body, was assigned oversight responsibilities for a statewide, online-only sports betting despite little experience regulating other gaming forms.
This length of the rule-making process — and some of the rules themselves — were controversial, especially the nation’s first ever mandate that operators hold 10% revenue margins, an unheard-of practice domestically in an industry that typically holds between 5% and 7% revenue margins. Sustained sports betting stakeholder lobbying helped minimize the original mandate from 15% to 10%, but this requirement will still be in place when Tennessee sportsbooks launch in the coming weeks. Gaming industry officials worry this will force books to offer non-competitive lines or limit certain types of wagers, which they fear will force would-be legal players back to unregulated offerings.
Line prices will be one of many aspects of Tennessee’s launch industry observers will monitor in the coming weeks. As many as four sportsbooks will enter the first exclusively online sports betting market, one that could influence other states considering legal betting options of their own.