Tennessee's Unique Approach to Sports Betting Could Eventually Grow to $6 Billion Market, According to PlayTenn.com Analysts

LAS VEGAS, Oct. 29, 2020 /PRNewswire/ -- Tennessee's sportsbooks could generate $6 billion in bets annually once the market reaches maturity, according to analysts from PlayTenn, which offers news and analysis of the fledgling Tennessee gaming market.

As many as four sportsbook operators — including FanDuel and DraftKings, the nation's two largest operators, as well as BetMGM and local operator Action 24/7 — will make their official debut in Tennessee on Sunday. That will make the Volunteer State the 19th state, and Washington D.C., to offer some form of legal, regulated sports betting.

"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," said Jessica Welman, analyst for PlayTenn.com. "The potential for Tennessee is significant, but the state is working with a lot of variables that make it atypical among legal markets."

Welman explains the ins and outs of Tennessee sports betting in this video.

Tennessee's market is almost identical in size to Indiana, a state that has attracted $1.4 billion in sports wagers in 13 months since launching, making it the fourth-largest market over that time. In October, the Hoosier State set a state record by accepting $207.5 million in bets for the month.

While similar in size, though, Tennessee varies in myriad ways that could affect the growth of the sports betting industry. For one, the state's operators are required to have a 10% hold, which is the percentage of wagers sportsbooks must keep. No state has ever put in place such a requirement, and it is a high threshold. Historically, the hold at sportsbooks in Nevada is more like five to seven percent.

The state's 20% tax rate on revenue is also relatively high, which could limit operators' interest in the Tennessee market. On the other hand, the state's $750,000 upfront licensing fee is relatively low, which is appealing to operators.

The launch of sports betting will mark Tennessee's introduction to gaming, other than lottery games. That too is a first and could be a benefit. Online operators will not be tethered to retail casinos and need not bother with in-person registration. And there are no state heavyweights for new operators to overcome.

"It's too much to say that Tennessee is the Wild West of markets, but it is far more open than we have seen," said Dustin Gouker, analyst for PlayTenn.com. "DraftKings and FanDuel will have an advantage early on, but we expect a highly competitive market that will attract a host of operators."

To reach $6 billion a year, which could generate nearly $120 million in tax revenue for the state if sportsbooks can reach a 10% hold, Tennessee will have to capitalize on its love of local sports betting teams.

Like Colorado, which launched earlier this year, Tennessee is home to a robust sports culture, which includes major college teams in addition to the NFL, NBA, and NHL franchises. Colorado used heavy local interest to edge Indiana in October with a $207.7 million handle despite having a smaller population.

"Tennessee has a lot going for it, including being home to teams with passionate fanbases," Welman said. "But only time will tell to see if its regulatory gambles, especially the hold requirement, will hold the market back."

For more, visit PlayTenn.com/news.

About the PlayUSA.com Network:
The PlayUSA.com Network and its state-focused branches is a leading source for news, analysis, and research related to the market for regulated online gaming in the U.S.

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Zack Hall, DVA Advertising & PR, 541-389-2411, [email protected]

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SOURCE PlayTenn.com