Tennessee is about to upend the way it taxes sports betting operators after Gov. Bill Lee put pen to paper on SB475, however, sportsbooks paid $7.1m as they paid with the old system for the final time.
Gov. Lee penned the bill that means operators will pay a 2% tax on handle, rather than 20% of GGR in May, and the Tennessee Sports Wagering Advisory Council revealed that operators took $279.8m in bets last month.
This marks a decline of 12.2% from April, owing to the decline of sporting activity during this period of the year. However, handle is up 7% YoY as the Tennessee market continues to grow.
Despite the downturn in sports betting handle, operators enjoyed a very high hold rate of 13.9% in May, much stronger than the 10.4% recorded in May 2022 and the 10.9% back in April.
This meant that revenue actually increased from the previous month, with May’s $357m standing 11% higher than was made during April. Showing the strength of TN’s long-term market, this figure is 50% higher than the $23.8m generated during May of 2022.
The Tennessee SWAC does not reveal any information about individual operator’s revenue figures, nor does it break down handle by sport.
Currently, there is a 20% tax rate imposed on operators’ GGR, meaning that sports betting generated $7.1m for the state in May 2023, up 49.9% compared to the $4.8m yielded in March 2022 and 11% from April.
However, as mentioned above, Tennessee’s tax structure is about to change as operators will be required to pay 2% of handle.
If this change were to be implemented for May, then operators would have paid $5.6m in taxes, 21.1% less than the $7.1m they actually paid to the state.
