When it comes to sports betting tax revenue, the state of Tennessee ranks fourth in the nation.
The Volunteer State has accumulated almost $16 million in state privilege tax over the past five months.
That figure is pretty remarkable when you realize the Tennessee sports betting industry is just six months old.
Top states in terms of sports betting tax revenue
Only three other states, Pennsylvania, New Jersey and Illinois, top Tennessee in terms of tax revenue accumulated from November to March.
These states also happen to be the leading three states in terms of overall handle for March as well.
In terms of overall handle since the Supreme Court struck down the federal sports betting ban in 2018, the following states lead the pack:
- New Jersey
Tennessee is steadily working its way up that list. However, it still has some catching up to do being such a new addition to the industry. Regardless, that hasn’t stopped this young market from already breaking records and setting standards as the nation’s first online-only sports betting jurisdiction.
This April, initial revenue reports revealed that Tennessee became the quickest state to reach over $1 billion in wagers. No other jurisdiction has accomplished such a feat within a six-month timeframe.
New Jersey has been the only other state to come close, though it took the state seven months to do so.
Tax rates in other top states
Tax rates imposed on sports betting operators fluctuate greatly from state to state.
They range anywhere from 6.75% in Nevada to 51% in Rhode Island.
Pennsylvania, the state generating the most sports betting tax as of late, requires 34% of an operator’s adjusted gross revenue to be allotted to taxes. This has resulted in over $54 million in tax revenue over the last five months.
New Jersey currently taxes brick-and-mortar sports betting at 8.5%, while online wagering is taxed at 13%. From November 2020 to March 2021, the state has generated almost $46 million in tax revenue.
Illinois came into the sports betting fold in March 2020 and has since become one of the most successful sports wagering markets in the nation. The state taxes operators at a rate of 15%, though the rate could fluctuate to omit promotional spend from its equation by 2023. Under the current rate, the state has accumulated over $31 million these past five months.
Tennessee’s fledgling sports betting market, which operates at a 20% tax rate, generated half that amount between November and March. But nearly $16 million in sports betting taxes is nothing to turn a nose to. Tennessee generates more tax revenue than many states that have been operating legal sports betting for much longer.
Nevada trails close behind Tennessee, generating just over $15 million in taxes during the same five-month timeframe, but the jurisdiction has had legal betting since 1949.
Where does Tennessee’s sports betting tax go?
Tennessee’s imposed 20% privilege tax has resulted in $18.5 million in tax revenue since launch. That tax is then divided between state initiatives.
The Tennessee Lottery For Education account receives 80% of this, amounting to $14.8 million in funding so far.
After this, 15% goes to local road and infrastructure projects, which have received a total of $2.8 million.
The final 5% is reserved for Tennessee responsible gaming efforts and addiction treatment programs. The programs have benefited from roughly $1 million since sports betting’s launch in November.
Representatives have recently petitioned for a shift in the allocation of tax funds. They would like tax revenue to benefit K-12 education programs rather than the secondary education efforts.
Under this new proposal, the Lottery For Education account’s 80% chunk of sports betting tax would be redirected to K-12 facility maintenance initiatives statewide. The bill was introduced back in January, but this year’s Tennessee General Assembly concluded without a resolution. In order to pass, legislators will have to reintroduce it during next year’s session.
In the meantime, secondary education will continue to reap the benefits of Tennessee’s ever-growing sports betting industry.