Tennessee Drafts and Publishes Sports Wagering Laws

The draft sports wagering rules for Tennessee sports betting have been published and will now be debated in public. The state is only planning on mobile sports betting.

Draft Sports Wagering Rules Published in TN

Tennessee is on track to launch sports betting, after SB0016 passed in the 2019 legislative session, and now the draft sports wagering rules have been released.

The framework includes advertising restrictions and will be put up for debate, offering members of the public an opportunity to weigh in. According to the draft rules, wagers will only be placed online or at remote kiosks.

Is Tennessee Really Ahead of the Curve?

Originally, Gov. Bill Lee waved in SB0016 with conditional approval of the plans, arguing as follows:

“I do not believe the expansion of gambling through online sports betting is in the best interest of the state, but I appreciate the General Assembly’s efforts to remove brick and mortar locations.”

The Tennessee Sports Gaming Act was then enacted on July 1, 2019. The state’s take on sports betting is also unique, with lawmakers allowing mobile betting online, but banning all physical gambling operations.

According to American Gaming Association (AGA) Senior Vice President of Strategic Communications Casey Clark this could be a mistake, as there is nothing to stop Tennessee bettors from practising online wagering at sportsbooks that haven’t been approved by the state.

However, to Rep. Rick Staples, the sponsor of the bill, the mobile-only bill indicated how advanced the Volunteer State was in establishing its own sports betting operations.

An Overview of Tennessee Gambling Ads Laws

Regarding advertisement, the state expects every promotion and ad to be submitted to the Tennessee Lottery, which will regulate the segment, at least 30 days in advance for review throwing a spanner in advertising efforts.

Similar to the United Kingdom where sports betting is a maturing market, the regulator will make sure operators do not encourage excessive gambling through their marketing campaigns.

Every piece of promotional work will have to feature gambling assistance information, such as a helpline number as well as a responsible gambling message. The regulator has also included a ‘good-taste clause,’ which will probably be open to interpretation.

Moreover, ads mustn’t target individuals who aren’t yet of the legal gambling age set at 21 in the state.

Three Types of Gambling Licenses

To obtain a license, operators must be members of the Global Lottery Monitoring System (GLMS) designed to establish better player protection and uphold the integrity of the lottery industry. Meanwhile, there will be three types of licenses:

• Level I License $750,000
• Level II License – $75,000
• Level III License – $7,500

Each license will cover a different aspect of the experience. Level I license will be issued to operators who want to run online sports betting. The price of the license will be $750,000 annually.

For suppliers and providers of AML and KYC services, equipment, data, systems and geolocation solutions, the annual license would cost just $75,000. A License III is issued for providers of ‘non material’ services.

It remains to be seen which services are considered ‘non material.’ Meanwhile, the Lottery will require a $50,000 non-refundable payment to consider an applicant for a license.

Taxes and Allowed Wagers

In terms of taxation, the law calls for a 20% blanket tax on all online betting operations. Estimated 80% of the total tax collected will be allocated to education and 15% will be re-distributed between local governments. Lastly, 5% of the amount will go to the department of mental health to help tackle potential problem gambling.

The Lottery will also have to smooth out over a few wrinkles regarding allowed bets. For example, sports fans won’t be able to place prop bets on collegiate or professional contests specifically when the outcome can be determined by one person.