Tennesseans could wager more than a half-billion dollars on sports bets this month since Tennessee's legalized online sports went live over the weekend, according to a new projection by the online betting site AmericanGambler.com.
If Tennesseans follow the example of gamblers in New Jersey in their first month of online sports betting, Tennessee could generate an estimated $523 million in online bets this month to give the state an estimated $7 million extra in tax receipts in November, based on a formula developed by American Gambler.
"Though our estimate is based on a recent month of betting activity for a state that's had two years to become the sports gambling hub of the East Coast, evidence shows that Americans everywhere have a greater interest in sports betting this year, so we expect that to be evident in Tennessee's first month," said Alexander Kostin, founder of American Gambler. "This is supported by the fact that New Jersey's record setting August was soon overshadowed by September, where monthly online sports betting handle increased by almost $77 million, which also shows how popular football is in American betting markets."
Online sports gambling in Tennessee launched Sunday during what is a particularly active football season, even during the pandemic. The number of American adults who plan to bet on NFL games this year is expected to increase 29% over last year.
Applying the average sportsbook margin of 0.7% yields an estimated $36 million in gross revenue for Tennessee sportsbooks specifically from online bets, Kostin said. The state of Tennessee then collects 20% of this revenue in taxes, which would be over $7 million.
"Even if betting activity in Tennessee more closely mirrors New Jersey's November 2018 figures, the first November that residents were able to place legal online bets, estimated tax revenue for Tennessee could be closer to $2.5 million," Kostin said. "However, with the increased interest in online betting nationwide, it wouldn't be surprising to see a greater percentage of Tennessee residents placing bets than we saw in New Jersey during their first months of operation."
Online sports gaming became legal in the state, which has no brick-and-mortar gambling venues, on July 1, 2019. Tennessee Education Lottery Corporation regulators approved sports betting rules in April. and the first four licensed sportsbooks - Draftkings, Action 24/7, BetMGM, and FanDuel - went live on Nov. 1 with their mobile apps.
Tennessee is the first state to regulate online sportsbooks directly, without the framework of casinos or possession of a retail gambling license as a precondition to operate a sportsbook online.
Licensed sportsbooks in Tennessee must abide by a 90% cap on payouts.
Betting is open in Tennessee to those over the age of 21 and within Tennessee who may place their wagers via the internet using a mobile device or computer. Sportsbooks are barred from creating any type of physical kiosk or service station for consumer use in placing bets.
The Tennessee Education Lottery Corporation has approved more than 100 events across 27 sports for sports wagering.
Bettors can wager on collegiate sports in Tennessee, but no betting is allowed on "individual actions, events, statistics, occurrences or non-occurrences" during a college game, according to Tennessee regulations.
- Compiled by Dave Flessner