However, that’s because sportsbooks failed to meet the minimum hold. Sportsbooks are no longer bound to keep 10% or be fined.Ī fiscal note attached to the new bill documents that nine of the state’s 11 sportsbooks paid $25,000 for failing to stick to the minimum hold.Īccording to Legal Sports Report, if the state had included the handle tax in their initial sports betting launch, they could have collected roughly $15 million more for state coffers than they did with the 20% GGR tax. The new legislation does away with the minimum hold mandate. They claimed they couldn’t offer odds as competitive or bonuses and promos as enticing to new users and that it hurt the user experience. However, sportsbook operators said the 10% hold requirement made it difficult to stay competitive against offshore books. With a 10% hold requirement, larger sportsbooks can’t just operate at a loss to gain a bigger market share. The other rationale for a 10% hold is that it would allow smaller sportsbooks to be competitive and keep any major sportsbooks from gaining a monopoly in the state. They also aimed to collect thousands of dollars in fines if the sportsbooks were unable to maintain the hold. The hold allowed the state to ensure a higher amount of revenue. But, they added the unusual stipulation that Tennessee sportsbooks would be required to hold a minimum of 10% of their handle each month.Ī typical hold is lower, usually around 5% to 8%. Second, it set a 20% tax on gross gaming revenue, which is fairly standard across states. First, it legalized only online sports betting, with no legal retail sites. When Tennessee legalized sports betting in 2019, the state’s legislature created two unique restrictions not seen in any other state. Lawmakers said the hold was good for tax revenue and for competition, but sportsbooks claimed it hamstrung their operations in the state. The change comes after a lengthy controversy over Tennessee’s law requiring sportsbooks to maintain a 10% hold on their handle. Why Tennessee is Changing its Sports Betting Tax Laws

While the tax structure is the biggest change, the bill ( SB 475 ) puts several changes into motion in the sports betting landscape. Prior to this change, Tennessee taxed sports betting at 20% of gross gaming revenue. Starting in July 2023, the new tax structure will go into effect, taxing legal online sportsbooks 1.85% of their total handle.

Revenue is the amount sportsbooks make after subtracting winnings and promos from the handle. The law makes Tennessee the first and only state in the nation to tax sports betting handle - the amount bettors wager - rather than gaming revenue. Bill Lee signed a new sports betting bill into law.

Draftkings sportsbook tax rules