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It has been a long, tough road toward legal sports betting in the state of Tennessee but optimism remains that the state could realize their goal of a November 1 launch, and maybe even beat that goal by a couple of days. Although most involved had hoped that the state would be live with their platform at the beginning of the NFL season, Week 7 seems to be a like a decent consolation prize for those eager to place a sports wager in their home state.

The long-awaited launch comes as states across America have seen spikes in the legal sports betting handles and have been setting records. It also comes at a time that their beloved Titans are in the midst of a stellar campaign that could see the team go deep into January and maybe even February. Despite being late to the party, the fact is that Tennessee will launch in the middle of a sports betting wave should allow the state to see immediate success based on the present national sports betting landscape.

A Long Road

The long road toward sports betting legalization in Tennessee started way back in May, 2019 when Gov. Bill Lee signed sports betting legislation. It eventually became law on July 1, 2019. It took 16 months and some intense and contentious negotiation but launch date is just around the corner.

The Tennessee Education Lottery Corp. Sports Wagering Committee said Friday that Tennessee could be live Friday, October, 30 instead of Sunday, November 1 as originally targeted, giving NFL fans ample time to sign up and place their bets before NFL Week 7 games and the Saturday college football slate.

All that has to be done now is a few final touches including background checks and application minutia before conditional licenses are granted to BetMGM, the two biggest DFS providers on the planet and Nashville-based Tennessee Action 24/7. Three other licenses have yet to be awarded but there is work being done behind the scenes to ensure seven providers operating in the state.

Mobile-Only Represents the Good

Statistics released lately by the American Gaming Association and individual states have shown that a strong mobile betting platform is essential. The AGA identified 80% of the National sports betting handle coming via mobile betting apps and the current "King of the bet-friendly states", New Jersey just reported that over 90% of their record September haul came from internet wagers.

Tennessee has adopted a unique approach with regards to its legal sports betting platform. The state will become the first in the nation that will be online-only. There will be no brick-and-mortar betting facilities and no racetracks will be able to take legal bets for the time being.

Hold Rate and High Taxes Represent the Bad

Tennessee's sports betting launch has gained attention by insiders for the 10% hold that the state has proposed. It comes in as the highest among states with a legal betting platform and means that wins will be capped at 90% for bettors.

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.

Tennessee's 20% tax-rate for legal sports betting is also seen as a potential stumbling-block for its legal sports betting platform. For comparison sake other states collect between 6.75% and 15%., with one exception, Pennsylvania that continues to set records despite their 36% tax-rate.

So…

It’s better late than never for Tennessee bettors. Providers, the wagering public and state and local coffers stand to benefit from a platform that has endured months of delays. In fact, the Volunteer State is expected to generate between $23 and $45 million in tax revenues in the first year of legal sports betting.

Industry insiders will be keeping a keen eye on Tennessee to see how their mobile-only platform performs, how the unusually high hold-rate will affect the state’s bottom line and how the 20% tax-rate will hinder or help the citizens to the Volunteer State.