Each month, the Tennessee Education Lottery (TEL) releases a report detailing sports betting revenue for the state.
Unlike any other state in the US, Tennessee has an online-only sports betting market. There are no retail casinos or sportsbooks that generate revenue for Tennessee.
Each licensed sportsbook reports the following numbers:
Total sports betting handle in TN history
Total sports betting revenue in TN history
Total sports betting taxes to date for TN
Tennessee’s first month of sports betting blew competitors out of the water. Bettors wagered over $131 million from Nov. 1-30, 2020. Prior to that, Indiana held the record for most handle during a launch with $35.2 million in September 2019.
Here’s a look at how other states performed during their first month of legal sports betting:
|State||Launch Date||First Month Handle|
|Delaware||June 2018||$7 million|
|New Jersey||June 2018||$16.4 million|
|Mississippi||August 2018||$6.3 million|
|West Virginia||September 2018||$7.44 million|
|Pennsylvania||November 2018||$1.41 million|
|Rhode Island||November 2018||$682,714|
|Indiana||September 2019||$35.2 million|
The Tennessee Education Lottery requires sportsbooks to hold 10% of annual wagers, or cap payouts at 90% for the year. If sportsbooks fail to comply, they can be fined, or in severe cases, have their license revoked. This rule will be enforced starting January 2021.
More info on the details of the hold requirement can be found here.
To calculate hold, use the following formula: [revenue]/[handle]. Then, move the decimal two spots to the right to get the hold percentage.
Take November 2020 for example: [$13,224,908]/[$131,444,523] = 0.101 or 10.1%
Tennessee is on the high side when it comes to its 20% sports betting tax. However, tax rates vary drastically across the US when it comes to sports betting. Nevada imposes a 6.75% tax rate, while comparatively, Rhode Island sits at 51%.
Tennessee is already a hot market. In just the first eight days of legalized sports betting, bettors wagered over $27 million, leading to almost $510,000 in tax revenue for the state.
In the first month, over $2 million in taxes came in.
But where does all this tax money go?
The Tennessee Education Lottery’s Lottery for Education account receives 80% of the tax revenue. The account helps fund scholarships and grants for students in the state. Over 15 scholarship programs share these funds.
After this, 15% of the tax revenue goes to local governments for use on roads and other infrastructure projects.
The final 5% goes toward state-funded gambling addiction programs organized by the Tennessee Department of Mental Health and Substance Abuse. Tennessee intends to boost its responsible gambling initiatives as gaming expands.
Sports betting could generate an additional $2.5 million in annual funding for Tennessee responsible gambling programs.