The operators of legal Tennessee sports betting apps no longer have to wish they were on old Rocky Top. At least when it comes to comparing their April 2023 revenue to the same figure from a year ago, that is.
In April of this year, Tennessee’s licensed online sportsbooks won more than $34.3 million from bettors, a 21% improvement from the same month in 2022. They also closed some of the gap in another key metric as compared to last year.
Tennessee collects $6.4 million in April sports betting taxes
According to the latest report from the Tennessee Sports Wagering Council, the numbers from April are looking quite strong. That’s given the history of the month in the state since legal online sports betting began in Tennessee nearly three years ago.
The apps took in more than $318.4 million in wagers during the month. As a result, sportsbooks won about 10.7% of the money they accepted in April.
The sum of dollars wagered set an April record for the state in terms of how much they bet on sports. That $318.4 million in bets represents an increase of 8.1% from April 2022 and 45.9% from April 2021. Legal sportsbooks launched in Tennessee in November 2020.
After the books took their allowable deductions, the $34.3 million in win became $32.1 million in taxable revenue. Thus, the state collected $6.4 million in revenue off that amount. That’s also an April high for Tennessee.
Still, April’s numbers paled in comparison to March’s, as tends to be the case. The apps won 24.7% more in March than in April off of 18.9% more money wagered. However, that gap closed this year relative to its predecessor.
April not as much of a letdown in 2023
From March to April 2022, the amount of money that Tennessee residents and visitors bet on sports dropped 21%. It’s unclear why the margin this year was smaller but if that becomes a trend, it will be a welcome one for the sportsbooks.
April usually begins the start of a summer slowdown as March Madness ends and the NFL is still months away from playing games again. If that gap shrinks, sportsbooks become more profitable and Tennessee’s coffers benefit as well.
There’s no guarantee that future March to April comparisons will behave in this way, though. As an example, Tennessee sportsbooks actually won slightly more in April 2022 as compared to March of that year. Their revenue, not how much money they take in, is the important metric for them.
These numbers bear watching moving forward for another reason. The Tennessee legislature just drastically changed how legal sportsbooks pay taxes in the state.
Could Tennessee sportsbooks fare even better in April 2024?
On Wednesday, Tennessee Gov. Bill Lee signed a bill into law with significant impacts on the state’s licensed sportsbooks. The law drastically changes how the state taxes sports betting activity. Whether that will be for better or worse for the books’ bottom lines could fluctuate.
Going forward, books will be assessed a 2% privilege tax on the money they take in from bettors. Prior to this change, Tennessee assessed a 20% tax on the adjusted revenue of the books. Doing the simple math (no adjustments) shows how the sportsbook’s win rate still matters greatly.
A 2% chunk of April 2023’s $318.4 million in wagers amounts to around $6.3 million. Thus, even without adjustments, the new formula would have represented a small savings for Tennessee sportsbooks compared to the $6.4 million they actually paid. It’s possible for the new formulation to cost them, though.
If a book has a bad month, losing more money than it makes off the bets it takes, the tax burden can put the book even further in the hole. That’s because Tennessee no longer taxes books on the amount of money they make but the amount of money they take.
For that reason, winning bets has become even more paramount for Tennessee sportsbooks. Should they continue to improve their April win percentage (it’s increased by at least three tenths of a percent each year so far), they could end up finding yet another figurative stony peak in 2024.