Sports betting operators in Tennessee may see significant changes to the existing regulatory framework thanks to a proposal that is gaining traction. The proposal, Senate Bill 475 (SB 475), has recently cleared the Senate in Tennessee last week following a 30-0 vote. Now, it is advancing toward the House of Representatives, a report released by
Tennessee Bill Calling for Betting Handle Tax Gains Traction
Sports betting operators in Tennessee may see significant changes to the existing regulatory framework thanks to a proposal that is gaining traction. The proposal, Senate Bill 475 (SB 475), has recently cleared the Senate in Tennessee last week following a 30-0 vote. Now, it is advancing toward the House of Representatives, a report released by Covers reveals.
But what’s so important about SB 475 and what are the changes it brings to the sports betting regulation? Currently, sports betting operators in Tennessee pay a 20% tax on their sports betting revenue. However, the new proposal calls to change that tax rate. Instead of the 20% tax on sports betting revenue, the proposal calls to introduce a 2% tax rate on the betting handle of the sportsbooks.
SB 475, if approved, would mark the first handle tax introduced by a state in the US. The proposed change is for the good, lawmakers say, as it is expected to increase the tax revenue collected by Tennessee. Approximately $7.3 million more is expected to be collected on an annual basis given the proposed legislative changes.
Eliminating the Hold and Requirement for Official League Data
Currently, there is another requirement for sports betting operators in Tennessee. Licensed operators are required to hold 10% of the money handled on an annual basis. Under the recent proposal, that requirement hold would be eliminated. This part of SB 475 doesn’t come as a surprise, considering that the gambling regulator in the state, the Tennessee Sports Wagering Advisory Council (SWAC), confirmed that the majority of the operators in the state couldn’t hold to 10% of the handle.
This meant that the operators had to either pay a fine of $25,000 or consider paying the 10% hold. Not unexpectedly, most operators decided to pay a small fine, rather than paying sums that can hit a million dollars or more. John Valliant, one of the members of the regulator, spoke on the topic during a meeting earlier this year explaining: “If I have a choice between paying $1 million and paying $25,000, I’m going to take the $25,000 every time if nothing’s going to happen to me.”
Additional changes proposed to the existing regulation involve the use of official league data. The aforementioned bill proposes to remove the requirement for sports betting licenses to use official sports league data when providing options for in-play wagering. While SB 475 is gaining traction in Tennessee, a separate proposal, House Bill 1362, proposes similar changes and is also being considered by lawmakers in the state.
