Tennessee collected $3.3 million in taxes from $340 million in sports wagers placed at sportsbooks in the state in December. The month was the third-highest for amount of bets placed since the market launched in November 2020: it follows October, which saw $375.3 million in handle; and November, at $365.7 million in bets.
More than $2.7 billion in bets were placed in Tennessee in 2021, according to The Center Square, resulting in $39.3 million in taxes paid on $240 million in gross revenue at eight active sportsbooks during the year. 2021 was the state’s first full year of sports betting.
“The playoff push from the Tennessee Titans and the momentum of the Memphis Grizzlies gave sportsbooks a nice boost to make up for a dwindling college football schedule,” said Alec Cunningham, an analyst for PlayTenn.com. “Sportsbooks have pushed the envelope over the last four months, offering an avalanche of incentives and promos to help grow their customer bases. Those efforts have been a success, and should continue to help grow the market once football ends.”
The year established Tennessee as the ninth largest state in terms of betting volume. The December figures saw handle up 88.9% from $180.9 million in December 2020, according to data released on Friday by the Tennessee Education Lottery's Sports Wagering Advisory Council.
Bettors fared worse on December’s bets than in November, a month in which sportsbooks in the state won a record $36.9 million. However, gross revenue in December was up 77% year-over-year to $24.6 million from $13.9 million in December 2020. Promotions whittled adjusted revenue to $16.5 million.
"Tennessee has overall performed well, especially considering it is still a very young market," said Eric Ramsey, an analyst for the PlayUSA.com Network. "Tennessee will continue to mature over the next year. It would not be a surprise to see it make up ground on more established markets like Colorado and Indiana, which have similar populations but drew significantly more in wagers in 2021."
Tennessee’s cumulative hold percentage -the revenue kept by sportsbooks as a function of handle- will presumably fall below 10%, meaning at least some operators will face a small fine for 2021 operations, explains PlayTenn. The Tennessee Sports Wagering Advisory Council “continues to review the rule,” the only one of its kind in the US.
According to the Tennessee Education Lottery, operators in the state failing to meet the capped payout rules for the year could be assessed up to a $25,000 fine, although they can alternatively pay the “true-up” to avoid the assessment of the fine.
"When operators combine for a hold rate that is one of the highest in the U.S., yet still fall short of the state's requirement, we begin to see how challenging a threshold this truly is to meet," Cunningham said. "In addition, the hold requirement appears to have slowed growth somewhat. It's not ideal, but the upside is that sportsbooks in Tennessee continue to be innovative in growing the market."
Tennessee! We're officially live and excited for you to download Wagr and start betting with your friends. Check us out and let us know who you're betting on first ☝️ https://t.co/dTi7TbllyW— Wagr (@withwagr) January 20, 2022
Last week, Tennessee added Wagr to its growing list of active operators in the state. The social sports betting app, which this month secured $12 million in a new Series A round, had received approval to launch in the state on August 31 but took its first bet last month during a private beta launch. Now, as of last week, it is available for iOS devices and the general public.
According to the state’s Sports Wagering Advisory Council Executive Director Mary Beth Thomas, Tennessee could see a total of 14 sports gaming operators active in the state this year. Eight operators are licensed in Tennessee, five more are pending and another has sent in an application, the executive said earlier this month.