When Tennessee imposed its 10% hold mandate on operators at launch of sports betting in the state, the industry universally balked at the idea sportsbooks could consistently hold in excess of 10%.
That hold mandate is going way next month but many operators, such as FanDuel, have shown that double-digit holds are not only attainable but can be commonplace.
The new tax structure in Tennessee though is no longer banking on high hold and bigger revenues to determine tax dollars going to the state from sports betting.
Tennessee made history with its new law, which now taxes sportsbooks based on the handle generated in a month as opposed to revenue. The previous rate was 20% of gross gaming revenue. Now the number will be 1.85% of handle.
In the case of June, the new rule would’ve actually cost the state a little money.
With $230 million in handle and $23.1 million in GGR, the state sportsbooks generated $4.6 million in revenue for the state and generated a hold rate of almost exactly 10%.
Had the state taxed based on handle this month, the tax payment to the state would have amounted to nearly $4.3 million. The state would have lost out on an additional $374.5K in tax payments.
So far in 2023, sportsbooks have held in excess of 10% for three of the six months for which there are reports.
July 2023 will be the first month the new implementation of the 1.85% handle tax.
