Council Member Echoes Concerns On Tennessee Sports Betting Regulations

Posted on January 6, 2020 - Last Updated on March 9, 2020

At least one member of the Tennessee Sports Betting Council understands the issues many others have voiced with the state’s draft regulations for sports betting in Tennessee. That’s apparent in a recently released council member letter.

The letter is from Thomas H. Lee, who was appointed to the council by then-Speaker of the Tennessee House Glen Casada. It contains Lee’s thoughts on the proposed regulations.

Council member letter asks for clarity in regulations

Lee begins by explaining why he chose to submit his comments in this way instead of using the Tennessee Education Lottery’s form. Because of his role on the council and the extent of his commentary, he explains, a long-form letter is more appropriate.

Lee then dives into his comments. He states that properly regulating Tennessee sports betting requires a clear objective. To determine that, Lee argues, it’s necessary to clarify the purpose of legal sports betting in Tennessee.

Is it merely to provide a superior alternative to the black market? Does it exist to capture as much revenue as possible for the state?

If the latter is a primary consideration, then Lee’s next point is important. He sees a huge flaw with the annual payout cap of 85% of handle, as many others have.

Lee correctly points out that not only is that a deviation from standard practice in other markets, but it would also harm legal sportsbooks‘ abilities to pull from the black market. In turn, Lee says, that means less revenue for the state.

Lee also has concerns about excessive regulations harming more than just sportsbook operators.

Clarity on license requirements, impermissible wagers

Lee questions the necessity of a Class III license laid out in the draft regulations. Loosely interpreted, that could require any company that acts as a vendor to a sportsbook operator to obtain a license regardless of the fact that its product/service is widely used in many disparate industries.

For example, would the companies that manufacture and service the servers the online sportsbooks run on be subject to this requirement? Lee argues that only those companies that wish to actually accept bets on sporting events should face licensure requirements.

From there, Lee addresses many smaller points. One that will be of particular interest to Tennesseans is the draft regulation on prop bets.

The draft regulations make wagers on in-game events during intercollegiate sports impermissible. The same goes for in-game events that rely solely on the outcome of a single play, like a free throw in basketball.

Lee suggests modifying the regulations to open up wagering on college teams but leaving in place the restriction on live bets on college players. That would mean Tennessee residents and visitors could bet on how many points the Volunteers men’s basketball team would score in the first half of a game but could not wager on how many points Jordan Bowden would score in the same time period, for example.

Lee also seems to find the regulation on single-play events unnecessary. It’s hard to find fault with that line of thinking, as in-game bets on matters like which player will score the first point in a basketball game are popular in other states.

Lee’s questions on definitions and closure

Lee finishes by taking issue with other definitions, including one that draws upon his experience as a defense attorney.

The current draft bans those who have been defendants in litigation calling into question their business practices. Lee aptly points out that “persons who should not be sued are sued all the time.”

There are several other definitions and terms that Lee asks his fellow council members to take another look at. He also urges the council to make received comments like his publicly available.

Lee has taken the lead in walking his talk on that point by releasing this letter to the public. His arguments are sound, and the state would be wise to seriously consider his suggestions.

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Derek Helling

Derek Helling is a lead writer for PlayUSA and the manager of BetHer. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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