BetMGM Exec Possibly Tips Hand About Betting Prices In Tennessee At Launch

Posted on October 28, 2020

We know quite a bit about the launch of Tennessee sports betting, but there are still some looming questions.

One of the biggest might be the practical effects of the 10% hold requirement set forth by the Tennessee Lottery. We’ve talked extensively about the potential impacts of the hold mandate.

However, until Tennessee betting apps launch and odds are live, we won’t know for sure if and how the mandate will affect pricing.

After a recent panel at the online Global Gaming Expo though, one operator gave a possible glimpse at how things might look in the state.

BetMGM exec thinks 10% hold mandate will go away

During the panel on sports betting expansion, moderator David Payne Purdum of ESPN asked MGM Resorts President of Entertainment & Sports George Kliavkoff about the Tennessee rule specifically. Namely, what Kliavkoff thought about the hold mandate.

Kliavkoff’s initial response tried to keep things general about market compliance concerns:

“I think compliance requirements, particularly tax regimes, are a difficult balancing act. We understand that the states are trying to optimize the amount of tax revenue that they generate, but, at the same time, you have to be competitive. You have to set up a protocol where the operators can be profitable while, at the same time, offering competitive bets to customers. So I think this will take a little bit of time, I think this will settle out. I doubt it ends up at 10%. We’re supportive of the Tennessee authority and what they are trying to do, but I think it’s gonna, long-term, look a lot more like it looks in Nevada, Colorado, New Jersey, Indiana. Those are states that really have well balanced tax compliance rules.”

Kliavkoff is correct that the 10% hold mandate really does not have to stand in Tennessee. When the Lottery Board finalized regulations, the group said they would reevaluate the mandate after the first year of operation.

While the hold percentage is part of the regulations, it is not included in the statute, so the rule can be overturned without having to go back to the legislature to change the law.

Higher vig, more parlays possible solutions for TN betting apps

Purdum pressed Kliavkoff on the issue by asking in his follow-up what a product under that mandate might look like. Specifically, he asked:

“Basically you would have to hope that you would increase the number of parlay wagers or any of the wagers that have a hold percentage greater than your straight bets…is that how you guys are going to have to approach it? Either up the vig or increase parlay betting?”

Kliavkoff did not speak in certain terms, but did agree with Purdum that the most likely results for operators would be a push towards parlays or uncompetitive pricing in the form of higher vig:

“You’d have to change the betting protocol in a way where you were either trying to push people to other bets or you were mispricing things compared to the competitive market. I don’t see that as being a long-term sustainable rule.”

Is this a hint that betting protocols will look different on BetMGM Sportsbook at launch on Sunday? If it is, bettors can hope Kliavkoff is also right and the ineffective market is just a temporary situation.

Photo by AP / Paul Sancya
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Jessica Welman

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