Why The Massive Penn National Deal Skips Tennessee Sports Betting

Posted on August 5, 2019 - Last Updated on March 9, 2020

A massive Penn National Gaming deal sent waves through the gaming industry on Wednesday. There won’t be a ripple effect on Tennessee sports betting, however.

Despite the fact that legal sports betting in Tennessee is coming, a market access deal that includes some of the biggest names in sports betting doesn’t include the Volunteer State.

That doesn’t mean that the companies involved won’t begin operations in Tennessee. It just means they won’t do so with Penn when sports betting goes live next year.

DraftKings, PointsBet, others in on Penn National deal

Penn National Gaming, one of the world’s most prominent gambling operators, has made out like a bandit on its new deal. Penn announced expanded/new partnerships with five companies.

DraftKings, Kambi, PointsBet, theScore and the Stars Group are part of the deal. DraftKings, PointsBet, theScore and the Stars Group will operate land-based and/or mobile sportsbooks in conjunction with Penn.

Kambi will provide the operational infrastructure for those sportsbooks. The states in which deals have been struck include:

  • Florida
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Massachusetts
  • Michigan
  • Mississippi
  • Missouri
  • Ohio
  • Pennsylvania
  • Texas
  • West Virginia

Penn has a gaming presence already in all of those states. The various parties now have deals with Penn to access its market and hopefully cash in. That makes clear the big reason why Tennessee isn’t part of this deal.

The Penn isn’t mightier than the legal sword

Penn has no presence in Tennessee because casino games remain illegal in the Volunteer State. Legalizing sports betting may be a step toward eventual further gambling expansion.

There’s no guarantee of that, however. Until such a time, sports betting will remain online-only and companies like Penn will be relegated to merely operating mobile sportsbooks.

The unique landscape of Tennessee means a heightened risk for sportsbook operators who want to begin offering odds there.

Why no casino presence makes sports betting different

A positive take on the Tennessee market is that without casino games, there is less competition for gambling dollars in the state. There are negative aspects to the situation as well.

One of the reasons sportsbook operators often partner with facilities offering casino games is the foot traffic casinos offer. Patrons who are already there to play slots or table games are more likely to also wager on sports.

With no casinos to partner with, sportsbooks in Tennessee will have to drum up their own online traffic organically. Then there’s the fiscal aspect.

Running a sportsbook is traditionally viewed as a low-margin business. Most of the money taken in on wagers gets paid back out to bettors in addition to all costs of operation like taxes.

Having to spend more on advertising and marketing than sportsbooks that have the power of casinos at their disposal further cuts into that small margin.

With no hard data to gauge the level of interest in Tennessee, sportsbook operators may be more wary of investing in the state. There are some attractive points for the market, however.

What Tennessee does have going for it

Tennessee is home to one of only 32 NFL franchises along with an SEC football and men’s basketball program. Within the state are also an NBA team, an NHL franchise and another relevant men’s basketball program in Memphis.

That offers plenty of opportunities for wagering on events Tennessee residents and visitors are knowledgeable about and have an emotional connection to. The fact that Tennessee will be one of only a few states with legal mobile betting also makes it attractive.

It remains to be seen whether companies like DraftKings and the Stars Group will eventually open sportsbooks in Tennessee. If they do so, it won’t be in conjunction with Penn.

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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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