Tennessee Places a Payout Cap in Its Sports Betting Rules

By in Gambling Laws on
4 Minute Read
Tennessee Flag Sports Betting Bar

Tennessee has gone ahead with what many are calling a very controversial move by placing a payout cap on its sports betting rules. The payout cap has been put in place by The Tennessee Education Lottery Corporation Board of Directors during a telephone conference that was held this week.

The rule received unanimous approval and has since become the first jurisdiction in the entire country to specify how much money legal sportsbook operators are allowed to pay out overall on total bets taken.

Not a Hasty Move by Lawmakers

While it may seem to some that this was a hasty move that came out of nowhere, in reality this is something that has been in discussion for months now.

The board making the move to agree on a 90% cap is something that wasn’t spur of the moment, and it wasn’t a number just pulled out of thin air. What this 90% cap means is that sportsbooks have to “hold” or keep at least 10% of all the wagers placed annually.

So far, the only other jurisdiction in the country that has discussed a move like this has been Washington, D.C. where a cap of 80% was being floated by the D.C. Lottery. The cap didn’t end up being approved by the D.C. Council though.

The Cap Will Stand for a Year

It seems as though the Tennessee Education Lottery Corporation (TELC) Board of Directors is well aware of how the betting cap would go over. There’s also the fact that multiple numbers were floated that ranged from 85%-95% before settling on 90%.

TELC Board of Directors Chairman Susan Lanigan has said the cap will stand for one year, and at that point it will be revisited.

In terms of how the operators are feeling about this cap, many believe it will result in “inferior pricing” in comparison to markets where there is no cap in place or there is illegal offshore sportsbooks.

This makes it hard for the sportsbooks in the state to stay competitive and relevant. Operators are also worried that it will prompt the big-money bettors to opt for illegal channels instead, bypassing the entire system.

What that boils down to is a cap that may in fact create the exact opposite of the desired effect on the market. Operators feel the only ones that will thrive under these new rules are the black market sports betting operators.

Combine that with the fact that Tennessee has imposed a very high tax rate of 20%, in comparison to the 6.75% to 15% that other states have put into place, and Tennessee as a whole doesn’t appear to be competitive in the least bit.

Furthermore, critics are slamming Tennessee and declaring that what they’re doing with sports betting is a model to teach other states on what not to do.

July Could Mark the Launch of Sports Betting

As for when people can expect sports betting to go live in the state of Tennessee, all signs are pointing to July as the earliest date.

The final rules will need to be posted before any betting can go live, and that appears to be very close to happening. TELC Chairman Susan Lanigan also shared that things will move forward 90 days after the first application is filed.

Rick Rockwell

As a longtime freelance writer, avid sports fan, former athlete, and experienced sports bettor, Rick Rockwell has risen up the ranks at GamblingSites.org to become the self-professed "King of the Blog" in his first year with the site. ...

View all posts by Rick Rockwell
Email the author at: [email protected]