The first sportsbooks launched in Tennessee in November and got off to an especially strong start. Last week, the Tennessee Education Lottery (TEL) released revenue totals for December, and the second full month of sports betting in the state was even better than the first.
Tennessee sportsbooks report 37.6% increase in betting handle
Once again, the TEL’s monthly report is short on specifics, omitting information about how individual sportsbooks fared against one another.
- Gross Wagers: $180,900,000
- Gross Payouts: $167,000,000
- Privilege Tax: $3,080,000
“Gross wagers” refers to the total amount wagered or “handle.” In November, bettors wagered $131.4 million at Tennessee sportsbooks, the best first month ever for any state that has newly legalized sports betting.
December’s total handle of $180.9 million represents a big 37.6% increase in wagers for the sportsbooks.
Payouts likewise increased in December from the $118.2 million won by bettors in November.
Subtracting the payouts from the wagers shows the sportsbooks together collected $13.9 million in revenue in December. That’s up about 5.1% from the $13.2 million in revenue they earned in November.
TN sportsbooks come up short on hold requirement
Tennessee is the only state at present that features online-only sportsbooks. Another unique aspect of the state’s sports betting market is its hold requirement.
Sportsbooks are only permitted to pay out a maximum of 90% of the total wagers accepted. In other words, the sportsbooks must abide by a 10% hold requirement.
In November, the sportsbooks barely met the 10% hold requirement. However, December’s totals show they came up well shy of that percentage.
The $13.2 million in revenue collected in November was just a tad over 10% of the $131.4 million in total wagers.
But the $13.9 million in revenue from December only represented a little under 7.7% of the $180.9 million wagered.
Since the TEL provides no information about individual sportsbooks’ revenue, it is unknown how each did individually in terms of handle, revenue, or the hold requirement.
Luckily for the sportsbooks, the 10% hold requirement does not become official until January 2021. Any sportsbook that fails to meet the 10% threshold over the course of 2021 must pay a $25,000 fine.
In truth, 10% is a comparatively high percentage of hold. The hold at most sportsbooks around the country typically hovers around the 5-7% range.
Thus, Tennessee sportsbooks will face a challenge going forward. While January revenue totals won’t be reported until the end of this month, chances are the sportsbooks came up short again on the hold.
One factor in January that could help sportsbooks is the Tennessee Titans losing their first-round NFL playoff game 20-13 to the Baltimore Ravens on Jan. 10. That result probably favored the sportsbooks, given how many TN bettors likely wagered on the Titans.
Sportsbooks will be hoping to get back to the hold they saw in November.
More sportsbooks coming soon, although not by Sunday
Looking ahead, this Sunday’s Super Bowl LV will likely help TN sportsbooks get off to a hot start in February. All four are offering a wide array of betting opportunities on the big game.
Between the four, bettors can choose from hundreds of player and team props, as well as unique props like the outcome of the coin toss.
Meanwhile, more sportsbooks await their turn to become part of the action in Tennessee, although none appear as though they’ll be ready to go before Super Bowl Sunday.
Last Friday, the TEL’s Sports Wagering Committee approved two more operator licenses for William Hill and Wynn Sports.
A third company, Churchill Downs, had previously received approval from regulators as well. Churchill Downs will be launching a BetAmerica sportsbook. BetAmerica is currently in the process of rebranding as TwinSpires.
According to TEL CEO Rebecca Hargrove, none of those three operators will be ready to launch before Sunday.
Hargrove noted how one of the operator’s servers had been located in close proximity to the Christmas day bombing in downtown Nashville.
For now, the new operators will have to sit on the sidelines for the big game.