Lee Signs Bill To Charge Tennessee Sportsbooks 1.85% On Gross Wagers
Image Credit: PlayTenn.com & Thomas R Machnitzki / CC
The Center Square [By Jon Styf] –
Tennessee Gov. Bill Lee signed a bill that will make Tennessee the first state to tax sportsbooks based on the total gross wagers accepted in the state.
The new law creates a 1.85% gross wager tax, replacing a 20% tax on adjusted gross income for sportsbooks.
In April, the new tax law would have lowered the state’s sports gambling tax collections from $6.4 million to $5.9 million.
In 2022, the sportsbooks paid $68.0 million in privilege tax. Under the new plan, that would have been $69.7 million.
The new law came after two years of many of the state’s sportsbooks not reaching a 10% hold requirement. Last year, only nine of 11 active sportsbooks made 10% profit on wagers.
Instead of fining the sportsbooks and requiring additional tax payments, state legislators and the Tennessee Sports Wagering Advisory Council negotiated the new requirements.
Of the sports gambling taxes, 80% of the taxes collected from sports gambling goes to education, 15% goes to the state for distribution to local governments and 5% goes toward mental health programs.
The bill also removes the word “Advisory” from the council’s name and creates a new registration fee system for operators.
The tiered system of licensing fees has a nonrefundable $50,000 application fee and $750,000 first-year licensing fee that only remains at that level moving forward for sportsbooks that bring in $100 million or more in gross wagers annually. Below that number, fees are $375,000.
Registration fees are separate from taxes collected and the registration fees are used to pay for the council’s administrative and staffing budget.
The bill also removes the restriction sportsbooks can only use official league data in determining bet results. Tennessee was the only state with that requirement.
About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.
