TN Lottery Board Runs Sports Betting, But Arguably Knows Very Little About It

Posted on April 27, 2020 - Last Updated on May 8, 2020

The seven Tennessee Lottery board members are well-qualified to regulate a state lottery. They come to the Lottery Board with some great business expertise as well.

At the same time, their familiarity with the business of sports leaves much to be desired. The same goes for online gambling and sports betting, which is problematic given that they are currently in charge of both.

For better or worse, current TN law asks these people to learn on the job. Their lack of relevant experience is nonetheless disconcerting.

Tennessee Lottery Board background heavy on law and finance

TN law requires the Lottery to maintain a board of seven people. Among the offices are a chair and a vice-chair. Susan Lanigan and William Carver currently hold those offices, respectively.

Lanigan comes to the board with a legal background. Her most prominent role was serving as the Dollar General Corporation executive vice president and general counsel for over a decade.

Carver’s career also followed a legal arc. His areas of practice as a private and public attorney have been bankruptcy, employment, labor, and utilities.

John Crosslin is the top executive of the award-winning accounting firm that shares his last name. Carolyn Hardy is also a licensed CPA but has an extensive business background that includes operating her own transportation business.

Chris Patterson is a personal injury and wrongful death attorney who serves as the managing partner at Wiseman Bray. Pearl Shaw comes from the financial sector and has authored books about fundraising.

Eleanor Yoakum is the chairman of First Century Bank of Tazewell. She also has a background in the tobacco industry, for which she formerly served a post in President George H. W. Bush’s administration.

The collective decades of business and legal experience on this board would comprise a formidable group for any enterprise. That doesn’t make them familiar with running a sportsbook, however.

TN Lottery short on sports betting experience all around

Online sportsbooks are a business but have some unique aspects to them. For example, they pay all their operating expenses out of the small percentage of the handle they collect.

Accordingly, many sportsbooks actually operate at a tremendous loss. DraftKings reported a loss of nearly $143 million over the past fiscal year and that’s not atypical.

The biggest expense for online sportsbooks, outside of their payouts to bettors, is the cost of customer acquisition and retention. That’s part of why brands like DraftKings run in the red to the extent they do.

Someone unfamiliar with the business model might think these businesses are financially insolvent. That isn’t the case, however, as they continue to bring in record revenues and grow at a rapid pace.

Because sportsbooks’ success is more accurately measured by market share than the profit margin, the priorities for regulation should reflect that. A person with experience in the professional sports industry will understand that.

Fortunately, there is a way to provide some of that experience to the Lottery Board. The TN Sports Betting Advisory Council offers some sports business experience, especially through Memphis Grizzlies External Affairs Director Kandace C. Stewart. Admittedly though, the Advisory Council is short on sports betting and gambling experience as well.

Currently, the Council has an advisory role only but that might change. TN Lt. Gov. Randy McNally stressed that the TN Legislature could make some adjustments to the regulatory framework.

Not only could the Council take a bigger role through legislation but the current Board members’ terms won’t last forever. Future members of the Board may possess more sportsbook experience.

For now, the sports betting experience of most of the people making decisions in Tennessee is minimal. If the market struggles over the first few years, that may be one of the reasons why.

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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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