Advisory Council Happy With Latest Changes To TN Sports Betting Regs

Posted on March 10, 2020 - Last Updated on April 16, 2020

It’s a preliminary step but an important one. On Tuesday, March 10, the Tennessee Sports Betting Advisory Council approved changes to the sports betting rules for a recommendation.

If the Tennessee Education Lottery’s Board of Directors also gives its approval, the process of licensing potential sportsbook operators in the state can begin. There are some considerations that may delay that vote.

What’s new in the proposed sports betting rules?

During its meeting Tuesday, the council focused on several revisions to the draft regulations. While the discussion was minimal on most of the revisions, there was a lively discussion regarding one particular proposed rule.

The council aimed one revision at protecting the confidentiality of license applicants. Another refined the regulatory language on global risk management requirements.

Originally the regulations stipulated that every operator needed to use Global Lottery Monitoring Services.

One significant change was a clarification on allowable and banned events that sportsbooks can take action on. Future operators can post prop bets determined by an individual’s performance or single play within a contest.

At the same time, the council approved a modification of the rules to codify a ban on high school and youth league events. They also removed language that restricted operators’ choice of integrity monitoring services.

The three-tiered license structure remained in the regulations, though the council did try to clarify what entities qualify for each tier. The top tier is only for sports betting operators. The second tier is for essential products or services. The third and least-expensive license is for any company providing non-essential services that receives at least 1% of handle annually.

The council also axed a requirement for sportsbooks to submit advertising materials to the Lottery for approval 30 days in advance. The Lottery will instead issue guidelines for such content.

The most contentious item on the agenda split the room. By the end of the meeting, the council reached a consensus, but there was a lot of discussion before they got there.

Handle hold percentage still there, but lower

After recommending the Lottery board raise an 85% cap on sportsbooks’ payouts in the initial draft to between 90% and 95% in its last meeting, the council took up that issue once again. This time, the discussion was charged.

That discussion began with the notion of killing the cap altogether. Several council members expressed concern that having any cap on payout would harm future sportsbooks in the state’s abilities to compete with illegal bookies and offshore channels.

Others on the council argued the opposite. Their narrative was a cap is essential to guarantee revenue for the state and level the playing field for smaller operators.

As a result of that discussion, the council ultimately voted to solidify the recommendation at 95%. It’s important to note that all the newly approved rules are merely that right now, recommendations.

What happens in the regulation process now?

The Lottery Board has a meeting with Lt. Gov. Randy McNally on Wednesday. The meeting will address McNally’s concerns over the administrative protocol.

The TN legislature is looking at statutes to address that as well. A House committee meeting that happened in concert with the council meeting did not get to that legislation, however. The bill should come up at a future committee meeting.

Once the Lottery Board deals with those concerns and finalizes regulations, there could be some movement. It’s uncertain right now how quickly that will happen, however.

McNally might ask the board to wait on approving regulations until after the legislature considers the bill to amend the state law regarding sports betting. That could potentially take weeks.

Council members were optimistic that once the Lottery Board finalized regulations, license applications could go out quickly. The consensus was that could happen within 48 hours.

The council was also unified in having the start of the next college football and NFL seasons as a goal for sportsbooks going live. Whether or not that happens will depend on quick action from here on out.

Right now, a draft of the sports betting rules that all members of the council find acceptable exists. The pertinent matter now is whether the Lottery Board will agree and if so, how quickly.

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Derek Helling

Derek Helling is a freelance journalist who resides in Chicago. 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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