Tennessee’s sportsbooks could produce $6bn in bets annually once the market hits maturity, according to PlayTenn analysts.
On Sunday, four sportsbook operators (FanDuel, DraftKings, BetMGM and local operator Action 24/7) will make their official debut in the Volunteer State , making it the 19th state, and Washington DC, to offer some form of legal, regulated sports betting and maybe the most unusual market yet.
Jessica Welman, PlayTenn.com analyst, stated: “Tennessee’s sports betting industry will be purely a product of the modern movement to legalize gaming, with a regulatory framework that is unique and online operators untethered to any conventional retail casino.
“The potential for Tennessee is significant, but the state is working with a lot of variables that make it atypical among legal markets.”
The market in Tennessee is almost equal in size to Indiana, a state that has drawn $1.4 billion in sports wagers over 13 months since its inception, making it the fourth largest market over that span. In October, by accepting $207.5 m in bets for the month, the Hoosier State set a state record.
However, while close in scale, Tennessee differs in numerous ways that could impact the development of the sports betting industry. For one, the operators of the state are expected to have a 10 percent hold, which is the percentage of wagers that sportsbooks would retain.
Such a condition has never been placed in place by any state and it is a high threshold. Historically, Nevada ‘s grip on sportsbooks is more like 5 to 7 percent.
The state’s 20 percent income tax rate is also relatively high, which may restrict the interest of operators in the Tennessee market. The state’s $750,000 upfront licence fee, on the other hand, is comparatively low, which is attractive to operators.
The launch of sports betting, apart from lottery games, would mark Tennessee ‘s entrance to gaming. This, too, is a first and may be an advantage. Online operators are not connected to retail casinos and do not need to mess with in-person enrollment. And for new operators, there are no state heavyweights for them to conquer.
Dustin Gouker, PlayTenn.com analyst, stated: “It’s too much to say that Tennessee is the Wild West of markets, but it is far more open than we have seen. DraftKings and FanDuel will have an advantage early on, but we expect a highly competitive market that will attract a host of operators.”
Tennessee would have to capitalise on its passion for local sports betting teams in order to hit $6 billion a year, which will raise about $120 million in tax revenue for the state if sportsbooks can achieve a 10 percent hold.
Like Colorado, which opened earlier this year, Tennessee is home to a strong sports community that, in addition to the NFL , NBA, and NHL franchises with substantial follow-ups, includes major college teams. In Colorado, which edged Indiana in October with a handle of $207.7 million despite having a smaller population, such interest has been a boon.
Welman added: “Tennessee has a lot going for it, including being home to teams with passionate fanbases, but only time will tell to see if its regulatory gambles, especially the hold requirement, will hold the market back.”