Tennessee Exceeds Expectations with New Sports Betting Taxation Method
Tennessee’s New Taxation Method for Sports Betting Exceeds Expectations
In a surprising turn of events, Tennessee’s new method of taxation for sports betting has exceeded expectations in its first year. Last year, the state legislature made the decision to switch from a nationwide levy on sports betting operators to a taxation based on handle, starting in the 2023-24 fiscal year. The Tennessee Sports Wagering Council (SWC) recently reported $87.6 million in state taxes for the fiscal year they just completed, surpassing their initial estimates.
With a $342.2 million handle for June 2024 and $6.3 million in receipts collected, Tennessee saw a $4.3 million increase in tax revenue compared to the previous fiscal year. SWC Director of Engagement, David A. Smith, expressed satisfaction with the results, stating that the new tax structure allows the regulatory agency to focus on important issues such as underage wagering, sports betting integrity, illegal sportsbooks, and responsible gaming.
The success of Tennessee’s new taxation method can be attributed to several factors. Firstly, the previous method of taxation, which required a 10% hold and a 20% rate on AGR, was not well-received by operators. Many were willing to pay fines for not meeting the win rate requirements, resulting in missed tax revenue for the state. By shifting to a taxation based on handle, mobile sportsbooks no longer had to deduct promotional bonuses and credits, leading to increased tax revenue.
Furthermore, the SWC’s ability to forecast tax revenue was improved with the new method. While they were unable to directly compare tax numbers from the previous fiscal year, the SWC’s initial estimates of a 5% increase in handle proved to be conservative as wagering volume exceeded expectations. Tennessee is now the only state taxing handle, setting a precedent for other states to potentially follow suit.
Overall, Tennessee’s success in exceeding tax revenue expectations in the first year of its new taxation method showcases the benefits of a streamlined and efficient approach to sports betting regulation. With the focus now on protecting the public interest and ensuring responsible gaming practices, Tennessee is paving the way for a more sustainable and profitable sports betting industry.