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Tennessee Legalizes Sports Betting With SB16: Online ONLY!

Tennessee Small Map

The trend of states legalizing sports betting seems to continue gaining momentum as Tennessee has just done exactly that. The Volunteer State joins eight others in having passed the needed legislation, and the first sportsbooks are slated to open for business on July 1. They will be online-only; no physical betting locations are permitted under Tennessee law.

The bill was passed by the legislature on April 30, 2019, and it now heads to the desk of Governor Bill Lee who is expected to let it pass into law without his signature.

Photograph of Bill LeeGovernor of Tennessee Bill Lee Intends to Let Sports Betting Become Legal Without His Signature

Background

Paper With Red Question Mark

The Supreme Court decision in Murphy v. NCAA in May 2018 is what sparked the current wave of state-supervised sports betting legalization. It ended the federal prohibition on this form of gambling, which had applied all across the nation with the exception of four exempted states.

All things considered, the passing of the Tennessee bill – officially known as SB16 – is interesting due to the way in which gambling currently exists within the state. Unlike Pennsylvania and New Jersey, which had preexisting casinos before sports wagering became legal, Tennessee does not have any casinos whatsoever, and there are no local pari-mutuel wagering facilities either. The only types of brick-and-mortar gambling currently legally offered within the state are the Tennessee Lottery and very limited charitable gaming.

To say that Tennessee has (or had) some of the strictest prohibitory laws in the country regarding gambling would be an understatement. That is part of the reason why the passing of this bill came as such a surprise to so many. It's more typical for states to experiment with commercial and tribal casinos and poker rooms first before dabbling in any legalized online gambling.

With all of this said, it may seem like sports betting is still a far ways away due to a lack of infrastructure, but such is not the case. This is so because SB16 envisions the state's introduction to sports betting taking place online rather than in physical locations. The industry is slated to kick off July 1 at which point Tennesseans will be able to bet on licensed bookmakers' platforms via the internet.

Digging Into the Details

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Inevitably, it is believed that there will be physical locations at which people can place sports wagers, but the earliest days of betting will exist solely online. There were attempts at amending SB16 to allow for sports wagers to be placed at physical, brick-and-mortar locations, but those all failed. One of the biggest reasons these amendments were tossed aside has to do with the fact that totally new locations would have to be erected to support betting given the historical (and present-day) lack of TN gambling facilities.

As you might expect, bettors are required to be of at least 21 years of age, and bets can only be placed from within state lines. Athletes, team owners, and others who participate in athletic competitions and can affect their outcomes are prohibited from wagering on these events.

In addition to legalizing online sports betting, SB16 establishes a committee that will be tasked with overseeing and regulating the newly-created sports betting industry. The committee will be an extension of the state’s Lottery Commission and will consist of nine members total.

According to the bill, sportsbook operators will be charged a licensing fee of $750,000 to be paid on an annual basis. In addition to the fee for the license, operators will see their revenues taxed at 20%. Similar to what happens in other states, tax revenues generated from sports betting in Tennessee will be set aside for education, local governments, and gambling addiction. According to estimates, roughly $50 million in revenues will be created on an annual basis with that number expected to grow year-on-year.

There are no provisions in SB16 for launching online poker in Tennessee or virtual casino gaming. Still, if betting on sports proves to be lucrative for the state, we may very well see the menu of allowed wagering pastimes expand at some point down the line.

Political Disagreements

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There was plenty of skepticism surrounding sports betting in Tennessee particularly about the revenue estimates and whether the generated funds would truly reach their intended recipients. State Senator Mike Bell, for example, did not shy away from expressing his doubts in the revenue projections. He claimed that other states’ revenue estimates missed “by half” though this could not be independently confirmed.

Photo of Mike BellState Senator Mike Bell Is Skeptical of Optimistic Revenue Projections for Sports Betting

It will be interesting to see just how true the tax revenue estimates prove to be, but that is not of much concern to most Tennesseans who simply want to place wagers on their favorite sports teams and soon will be able to do so.

The fact that betting would be made so simple and widely available is exactly why the passing of SB16 was the subject of a lot of debate. Those who opposed the bill claimed that being able to place bets quickly and easily from one’s phone or computer would only contribute to gambling addiction.

To say that there was fierce debate about this bill amongst Tennessee lawmakers would be an understatement. From the beginning, the prospect of legalized sports betting has been a polarizing issue, with folks either vocally supportive or vehemently opposed.

Republican State Representative Andy Holt, an outspoken opponent, was quoted as saying:

“I think the legislature is pouring fuel on the addiction issues in our state. I’ve seen family members who don’t have money to feed their kids because they blew it on stuff like this. If we really want to talk about helping kids, this bill won’t do it.”

Tennessee Governor Bill Lee has also vocally opposed gambling, but he understands that this is something that his constituents want. Though Governor Lee has stated that he will not sign the bill, he will also refuse to veto it, which is good enough to turn it into law.

Leagues Extract Their Pound of Flesh

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Unique among the current sports betting states, Tennessee actually envisions an official role in the activity for professional sports leagues. Sportsbook operators will have to employ “official league data” when setting their odds for live betting – that is, wagering after a contest has already started, sometimes also known as “in play” betting. The only exception is if such data is not made available “with commercially reasonable terms.”

As long as they're not so greedy as to price themselves out of the market, the leagues can thus derive a dependable revenue stream through the provision of this information to sportsbooks. This will increase overhead and, together with the steep $750,000 licensing fee, may contribute to lackluster and limited sports betting products for the residents of Tennessee.

Major professional sports organizations have been lobbying across the United States for the inclusion of “integrity fees” to be paid to themselves by the bookies on every wager accepted. The ostensible reason for this is to fund efforts to preserve the integrity of the games from the outside influence of gamblers who may try to fix games or otherwise influence athletes. However, integrity fees are widely viewed as just another way for professional sports organizations to make a buck or two.

No integrity fees are included in Tennessee's legislation. They're not present in any other state either at least for now.

TN Sportsbook Legalization Bill

No Need to Wait

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You don't have to wait for licensed TN online sportsbooks to appear because there are a number of international organizations that already allow you to bet on sporting matches. They ignore Tennessee law as well as federal statutes because they're located in jurisdictions that are outside the grasp of U.S. law enforcement.

Check out our list of the best online sportsbooks for Americans. If you'd prefer playing poker online, then our guide to the leading U.S.-friendly internet poker rooms may pique your interest instead. Or for casino gaming, browse over to our USA online casinos review page.

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