Tennessee’s Sports Wagering Advisory Council (SWAC) revealed the latest report covering gambling activity in the state throughout October.
Since the beginning of July, Tennessee has been the only state taxing its sportsbooks according to their gross bets (betting handle).
In the past two months, the sportsbooks in the state have reported the highest handle during 2023 so far. However, with only four months of rolling out the new system, there’s still a lack of evidence and much discussion that needs to happen before we know whether it may or may not have been the right move.
Tennessee sportsbooks took in a record $445.2M in October handle
According to the state regulator’s latest report, Tennessee licensed operators took in $445.19 million in betting handle (total bets) in October. The figure represents a 9.83% yearly jump from October last year.
It is also a monthly 6.0% rise compared to September’s sports betting handle in Tennessee.
With the legal sports betting market launching in November 2020, the industry has been live for more than three years. Looking at this year, the total money gambled by Tennessee players in October has been the highest so far.
Sportsbooks claimed $1.39 million in adjustments, a 28.20% decrease from the $1.94 million recorded in September. The figure is also a yearly 44.13% decrease from $2.50 million paid in October 2022.
According to SWAC’s October 2023 report, the state made nearly $8.19 million in privilege fees for October’s sports gambling activity. The number is a minor increase (6.15%) from September’s $7.72 million but it is a 17.18% rise from the same period last year.
Still too early to tell if Tennessee’s new tax system works
On July 1, the state’s new sports betting tax law went into effect. Tennessee became the first and is the only US state taxing sportsbooks according to their gross wagers (total bets received). In the new format, Tennessee implies a 1.85% tax on the total amount of money gambled.
Other legal US gambling states tax sportsbooks according to their adjusted gross income (AGI) or gross gaming revenue (GGR). That was how Tennessee did it, too, at a rate of 20%, before changing to the new system.
The new tax structure aimed to remove financial risk from the state by ensuring Tennessee always receives privilege tax from all sportsbooks. This way, Tennessee sportsbooks are now able to set their odds and operate the way they see fit without having to structure their business to meet an arbitrary revenue number (the hold).
However, the last four months were insufficient to say whether the Tennessee General Assembly has made the right decision.