Tennessee’s Sports Wagering Advisory Council (SWAC) reported $230.3 million in handle on legal sports betting last month, compared to the $279.7 million in bets the state accepted in May. From the $230 million, betting sites paid out $204.8 million to winners.
After adjustments, operators claimed $23.1 million in adjusted gross income, which paints a bleaker picture than Tennessee’s poor handle. While handle fell roughly 17%, income dropped by 35%. The operator hold percentage fell slightly from May’s 13.3%, but still sits at a respectable 11%.
That means that the Volunteer State’s tax bill came up short. June’s bill came in at $4.6 million, well short of May’s $7.1 million.
Still, despite all the bad news, Tennessee’s betting market has improved in every category when paired with its year-over-year numbers. Handle increased by 6.7%, revenue by a whopping 81.8%, and the tax bill by an even larger 84%.
Out with the old in with the new
June is the last month of Tennessee sports betting’s old regulations that mainly concern how sportsbooks are taxed.
It used to be that operators were taxed 20% of their adjusted revenue, plus a requirement to maintain a hold percentage above 10% (or they would be charged a fee).
Now, starting July 1, sportsbooks will be taxed by the amount of bets they take in. A 1.85% tax on handle will certainly shake up things if other state’s see the change as a net positive. Operators no longer have to keep a 10% hold, meaning their lines can be lowered to entice more action.
But the tax system isn’t the only change. Vendors will now be paying the state to offer their services, including geolocation, payment processors, etc. These licenses used to be free, but now when vendors enter Tennessee’s market or current vendors need to renew, they will be paying $30,000 to $150,000, based on the type of business.
