After more than a year of tough negotiations, stumbles and delays, sports bettors in Tennessee finally got their long-awaited legal sports betting platform Sunday, in time for fans to throw down on the beloved Titans before their game with the Cincinnati Bengals. The Tennessee Education Lottery Corp. went live with four operators at 12:01 a.m. Central Time to the delight of the throngs of betting enthusiasts in the state.
Tennessee’s launch concludes a 16-month battle since legal sports betting became law in the state back in July, 2019 and five months after the Tennessee Education Lottery Corporation regulators approved sports betting rules in April. The platform figures to be highly scrutinized for a couple of different reasons – the fact that it is the nation’s first online-only platform and because of its controversial 90% hold-rate.
In a news release on Friday announcing that everything was set to go Sunday, Tennessee Education Lottery Corp. President and CEO Rebecca Paul Hargrove said Sunday “will represent the culmination of an enormous amount of work and due diligence to bring online-only sports wagering to Tennessee, the only state in the nation to do so.”
About the Online-Only Platform
Tennessee became the first and only state of the 20 that currently accept legal sports bets that has no brick-and-mortar casinos. None of the four online providers (Action 24/7, BetMGM and two of the biggest DFS providers in the world) are affiliated with a physical location in the state.
This type of online-only platform is a risk but one that could pay off in the long run. States with existing sports betting platforms have been showing an overwhelming revenue slant toward their mobile sites. The American Gaming Association recently released a report that showed over 80% of the bets in the US coming from mobile apps and internet sites.
New Jersey just reported 90.7% of their record $742 million September handle coming from internet betting and Indiana had 98% of their handle coming via mobile means.
About the Hold-Rate
The most controversial and contentious part of the Tennessee legal sports betting platform is unquestionably the unprecedented 90% hold-rate that was initially thought of as a deal-breaker for some service providers. It essentially means that wins will be capped at 90% for bettors and that providers are to hold 10%.
The rate is seen as unattractive and could lead to major providers avoiding Tennessee, a slower growth rate for the market in the state and perhaps most impactful, bettors in Tennessee seeking offshore and neighboring state betting options. Eilers & Krejcik estimates that the state stands to lose $10.9 million annually with the hold rate where it is.
Jessica Welman, an analyst for sports gambling site PlayTenn.com, said this means sportsbooks in Tennessee will likely have to include a slightly higher cost to book bets in Tennessee to meet the hold requirement. But she did go on to say that: “I think only a small percentage of very avid bettors are going to really notice the pricing discrepancy, if there is one,”.
Still to Come
The Tennessee Education Lottery Corporation Sports Wagering Advisory Council is mulling three other licenses for sports betting services in Tennessee to go with the four operators and dozens of suppliers and vendors currently involved in the platform.
Until then, the four providers will be battling it out for Tennessee gambling dollars through promotions. They include sign-up bonuses, free bets, deposit matches and odds boosts, among others.
Action 24/7 is offering a $51 registration bonus, BetMGM will offer a risk-free $500 bet for new customers and the two DFS giants are also putting their best foot forward with a $50 free bet on opening day and a welcome bonus up to $1,000.
It truly is better late than never for the Tennessee scene. Despite the many hiccups and delays on the road to launch, legal sports betting is expected to generate between $23 and $45 million in tax revenues in the first year.