In Nashville, motorists pivoting toward the Midwest or Deep South have little indication of the commerce roaring outside their car windows. Legal Tennessee sports bets have been flying since November, yet there isn’t a casino or a sportsbook in sight among the snowy hills and growing skyline. Billboards alongside Interstate 65 south of downtown mostly hawk baldness cures, strip clubs and the Johnny Cash Museum.
Yes, there are a few BetMGM billboards – including one underscoring its partnership with the Titans – and another for FanDuel, similar to the signage encasing a bus stop over by the Vanderbilt campus.
But the extent of Tennessee’s promising first month in the broader gambling business remains subtle to the casual observer.
It’s more ubiquitous for locals sitting in front of televisions, but in a state that had never sanctioned more than a state lottery before legalizing and launching a mobile-only sports betting market on Nov. 1, being able to tune out might be a factor in public acceptance, said Dr. Cody Havard, an associate professor of sport commerce and the coordinator of research for the Kemmons Wilson School of Hospitality and Resort Management at the University of Memphis.
“People who had strong feelings were going to be in their camps, regardless if you were pro-gambling or if you’re against gambling,” Havard told PlayUSA. “Somebody who is anti-consumer behavior suggests that if you see something enough times, then maybe that person could change. For those people who don’t have a hard line either way, just off of consumer behavior, I would think that it at least is going to have to have some type of positive impact on them. Positive impact is either making somebody think about participating or decreasing their negative views on it, or maybe their views on it become a little more accepting because it is legal.”
Currently, Tennessee Action 24/7, a local company, FanDuel, BetMGM and DraftKings are the only registered Tennessee sports betting operators in the state, though others have applied. BetAmerica was recently approved and more could be on the way.
A reduction in commuter volume during COVID-19 shutdowns might have added some temperance to the level of customer-acquisition ad-blitzing alongside the byways in Tennessee, but the presence of national leaders and old foils FanDuel and DraftKings – themselves no strangers to an all-out-saturation approach – could amp the volume as more competitors arrive or business booms. So far, the operators have targeted where those 6.9 million residents have been dwelling with much of local life shut down.
“I can’t pinpoint the day, but it’s been within the last two or two and a half months, it was almost like a switch was flipped and it honestly seemed kind of like election season and a swing state,” Havard observed. “It was like every commercial break, there was something from BetMGM on there. And every once in a while you would see something from, like, FanDuel.
“It was crazy. You’re just inundated with all this stuff. They’re really pushing this hard now.”
Tennessee’s unique landscape makes it a national case study
The campaign to win public support for, legalize institute rules for and commence the taking of wagers was perhaps even more complicated than could have been expected in a state that doesn’t even have retail casinos within its borders. One awaits across the Mississippi River in West Memphis, Ark., but the socially conservative or gambling-averse had kept retail casinos at arm’s length until Gov. Bill Lee, a Republican, allowed sports betting legislation to become law without his signature in 2019. Lee acquiesced at the time because the law didn’t “pursue casinos,” and engender criminal activity, in his opinion, according to a report by The Associated Press.
I am returning the Tennessee Sports Gaming Act (HB0001/SB0016) to the General Assembly today without my signature. My full statement is below: pic.twitter.com/iolgR8G6J0
— Gov. Bill Lee (@GovBillLee) May 24, 2019
Tennessee’s sports betting market attracted so much industry attention because of its unique set-up. With the nearest casino in Arkansas and a lottery standing as its only legal form of gambling, sports betting (or the prospect of it) was borderline revolutionary. The presence of so many professional and college sports teams and a booming tourist industry – particularly in ‘NashVegas’ – added potentially positive variables. Tennessee – the first mobile-only market – was inoculated from the COVID-19 shutdowns that shuttered casinos and sportsbooks in numerous other states. It became an interesting lab for Havard, who studies consumer behavior, particularly regarding entertainment.
“Almost every consumer industry has been fundamentally changed and has to adapt to the future. Look at what’s happening in Vegas right now with people not being able to go into casinos…Vegas is hurting. Other cities, other states are really hurting,” he said. “Do [gaming operators] use a similar model? Who knew in November, 2019, when Disney+ launched, in four months that they would be in the middle of a pandemic. Netflix is still and will be for awhile, holding the lion’s share of subscribers, but Disney+ just passed, like, 90 million subscribers because, out of necessity, that’s where people are going for their consumer behavior.
“So, this is an area where it’s just been thrown into shock as well. It’ll be interesting to see if more people or more governments adapt and adopt this type of path forward.”
With all of the nation’s casinos closed between March 21-May 5 and with legal sports betting available through mobile or online options in just 13 of 20 states or jurisdictions where it is currently legally underway, Tennessee’s model was accidentally prescient, Havard said.
“If you were going to launch something that’s entirely online, what a time, when people are not able to go into places and crowd into places, where they were essentially having to be home or having to stay separate,” he observed. “That’s one move that nobody knew was going to happen, but it kind of works in the favor of something being completely online.”
Tennessee’s first month of sports betting shows ‘potential’
The wait, however, shows signs of being worth it. According to the Tennessee Education Lottery (TEL), which oversees sports betting in that state, the operators handled $131.4 million in gross wagers in November, generating nearly $2.4 million in “privilege” taxes. Though TEL CEO Rebecca Hargrove acknowledged the difficulty in extrapolating future performance in the first month in general, and in an “unpredictable and extraordinary year,” she conceded in a news release that the November figures ”indicate potential.”
Havard agreed that the conflicting factors of COVID-19 and consumer curiosity make the November tally difficult to assess. December results are due for publication at the end of January.
“I don’t know if times were normal how they would have kind of evaluated bringing in that much,” he said. “First month, you could make the argument that it’s kind of that novelty aspect or the honeymoon aspect, and maybe everybody’s going to do it in the first month and then it’s going to kind of taper off after that. But that [revenue figure] is a positive, especially when your state is dealing with a budget as all states are while they’re in the pandemic.”
Tennessee took a winding route to sports betting
Months of bureaucratic work followed Lee’s tacit approval of sport betting’s inception, both in mitigating a series of potentially counterproductive rules – prominently a contentious 10% hold – and questions over the amount of authority the TEL and its sports betting advisory council would wield. Final rules were established in March, but vendor interest was initially tepid, with no applications landing in Nashville until summer, and none approved until September. The four current operators all launched on Nov. 1 and WynnBet and William Hill are pending approval. Bet America, soon to be rebranded under parent company Twins Spires, was approved by the TEL Sports Wagering Committee last week.
By state law, 80% of tax revenue from sports betting is allocated for education, 15% for local government needs and 5% for problem gambling programs.
Havard said sports betting could be even more likely to become just another part of everyday life because it launched during a time when citizens had much more pressing matters forefront in their lives.
“I would imagine for the next three or four years, at least, probably, the conversation people are going to have at work or wherever it’s going to be, ‘Hey, remember 2020 and the 2021 when everything kind of shut down and how everybody dealt with that?’,” he surmised. “[Sports betting] might be one of those things that is kind of under the radar for a while. And then four or five years down the road you kind of looked up and it’s like, ‘Oh yeah, look what started.’ And, ‘Hey, do you remember this started during the pandemic and this started during the lockdown?’ and look how successful it’s been, especially if it keeps bringing in a pretty good amount of tax revenue for the state.”