Tennessee legalized sports betting in 2019 with bill S 16.
It was a surprising move from a state that, by and large, wants very little to do with gambling.
Currently, these are the only forms of legal gambling in Tennessee:
- Tennessee Lottery
- Daily fantasy sports
- Charity raffles
There are no casinos, commercial or tribal, in the state. There are not provisions for private social gaming, like a poker home game, either. There also aren’t exceptions to the statutes for games involving skill.
Let’s take a look at Tennessee’s gambling history and take a deeper dive into what you can gamble on in the Volunteer State.
Tennessee gambling timeline
Compared to many states, Tennessee’s gambling timeline does not contain too many significant dates.
While many states legalized gambling in the 1930s to generate tax revenue after the Great Depression, Tennessee did not.
- 1905: Tennessee forms a committee to oversee horse racing in the state. However, a federal law ending horse racing disbands the committee after just one year.
- 1987: The state forms another committee, this on to rebuild Tennessee’s racing industry. This too dissolves after just one year.
- 2002: The Tennessee Education Lottery Implementation law passes.
- 2004: The first Tennessee Lottery draw takes place.
- 2010: The state legalizes limited charity gambling is legal, so long as 100% of the profits go to the charitable cause.
- 2016: Daily fantasy sports contests become legal.
- 2019: Bill S 16 regulates online and live sports betting.
- 2020: Tennessee regulators finalize and adopt regulations, issue licenses, and hopefully begin taking bets in the fall
How does Tennessee define gambling?
Some states’ statutes have complex definitions and lists of prohibited gambling devices. By comparison, Tennessee keeps it simple; a single sentence covers its definition of gambling:
“ … risking anything of value for a profit whose return is to any degree contingent on chance, or any games of chance associated with casinos, including, but not limited to, slot machines, roulette wheels and the like.”
If poker players or sports bettors that their activity is based on skill, not chance, the statute covered in a later amendment. As long as there is an element of chance in the activity, then Tennessee considers it as gambling.
Compared to other jurisdictions, the penalties covered on the TN gambling statutes are mild. Gambling is treated as a misdemeanor, not a felony.
Social gambling, like fantasy sports and home poker games, is not legal. However, there isn’t a history of the laws being enforced for this type of activity. Bigger gambling rings have been busted in the past though.
Tennessee Lottery history
For the lottery to become legal in Tennessee, the state needed a constitutional amendment. That meant there needed to be a referendum.
The Tennessee Education Lottery Implementation Law passed in November 2002. It went to the vote, with 58% of state residents voting for it.
In 2003, the Tennessee Education Lottery Corporation (TELC) formed. The first draws took place in 2004.
As well as TN-only draws, the Volunteer State is part of the Multi-State Lottery Association (MSLA). The MSLA gives Tennessee residents access to the huge multi-state draws like Powerball, Mega Millions, and Hot Lotto.
In addition to a host of popular draw games with weekly drawings, TN Lottery vendors also sell a wide range of instant scratch-off games. There is also a Keno To Go game with drawings
The Tennessee Lottery provides a website and an app, though only for information and draw results. The TN Lottery doesn’t have any online gambling options available.
Tennessee legalizes sports betting in 2019
The Tennessee Senate passed the bill S 16 on April 30, 2019, which set up a regulatory framework for mobile and online betting.
The bill was not signed by Gov. Bill Lee, though he didn’t veto it either. It became law by default.
Compared to some other states, the licensing fees are high. Sports betting brands will pay $750,000 per year, with 20% of their gross revenues paid in taxes. A clause in the regulations could affect live betting in the Volunteer State. What is interesting about the Tennessee sports betting law is that it opens the door for entities that are not existing casinos or sportsbooks to become involved with sports betting.
Feeds must be purchased from the leagues, as only “official data” is allowed. This rule has the potential to create monopoly situations, and it is not yet clear how the sports betting brands will react.
While many sports betting brands intend to roll out across the US, it is not yet clear which ones will bid for a TN license.
Possible entrants include:
- FOX Bet
- William Hill
These books will allow gambling-aged bettors within TN state lines to bet on pro and college sports, as well as international events. The first Tennessee mobile sports betting apps will go live in 2020.
Timeline for charity gambling in Tennessee
Charity gambling became legal in Tennessee in the 2010 Charity Gaming Act.
This activity is restricted in several ways. The four types of games allowed are:
- Reverse raffles
- Cake wheels
Many games that charities commonly use, including bingo and casino games, are excluded from these laws.
Any games have to be authorized in advance by the state. Each charity (which must be an IRS 501-c-3 or 501-c-19 organization) can apply for a single event each year.
One hundred percent of the profits must go to good causes. Charities cannot pay third parties to organize these events. Also, formal financial reports are required.
While charity gambling is legal in Tennessee, this has an entirely different setup to states such as New Hampshire. There is little or no possibility that any casino-style gambling could be organized under charity rules here.
Daily fantasy sports in Tennessee
DFS games have been operating in Tennessee since 2006 when DraftKings first appeared. These sites operated in a legal, gray area until 2016 when a law passed to regulate them.
Gov. Bill Haslam signed the bill, which controversially overturned the opinion of the TN Attorney General. The Tennessee Senate had previously passed the bill by a margin of 27-2. It taxes the DFS sites at 6% on revenues attributed to TN residents.
Both FanDuel and DraftKings gave statements praising the clarity in the law and customer protections.
History of horse racing in Tennessee
Tennessee has a noted history when it comes to horse racing, despite the fact it does not participate in it today.
It is the only state with a horse named after it, the Tennessee Walking Horse. In the early 1800s, there were races on public roads. Racetracks soon followed.
The Tennessee Derby began in 1884. Other big races included the Iroquois Steeplechase, which was held at the Percy Warner Park in Nashville.
In 1905, the flourishing horse racing industry ended. With the passage of an anti-gambling law, interest in attending races dropped dramatically.
Today, there are still harness and drag races at state fairs, but there is no official wagering on these events. In 1987, the state legislature passed a bill to establish a commission to look into restoring the dormant horse race industry. A year later, the commission disbanded and the act was later repealed in 2015.
In 2016, a bill was submitted that looked to restore on-track betting in Tennessee. This did not make it far through the legislative process before being rejected.
There is one option for Tennessee horse betting fans and those are advance deposit wagering (ADW) apps like BetAmerica, TVG, and TwinSpires.
There is no Tennessee law explicitly outlawing ADW in the state, so these sites are operating in a somewhat gray legal area. It is worth noting that there appear to be no instances of any criminal prosecution of people using these apps in the Volunteer State.
Future gambling regulation in Tennessee
Many poker and casino players ask whether these activities will become legal someday.
While Gov. Lee did not veto the sports betting bill, he made his feelings known about casino gambling. This expression was not positive, and almost certainly excluded any expansion of this activity.
Legal options for casino games include online sites like Chumba Casino and LuckyLand Slots. These sites operate under sweepstakes gambling rules.
Real-money poker is not legal under the original TN statutes, which didn’t make any distinction based on the involvement of skill. Again, regulation is seen as unlikely, though sweepstakes-based poker is available via Global Poker.
The best bet for future gambling expansion in TN is for horse race betting. Whether Tennessee will once again rival Kentucky for the prestige of its racing is something that only time will tell.