Photo Credit: PlayTenn.com
The Center Square [By Jon Styf] –
After Executive Director Mary Beth Thomas and the Tennessee Sports Wagering Council took over the management of online sports betting in the state to start 2022, Thomas vowed to review how sportsbooks were reporting their earnings and therefore paying taxes.
That accounting review led to changes, starting July 1, in how those earnings are reported and how the taxes are calculated. And, while the changes are subtle, they already are making a difference in Tennessee’s bottom line.
Despite a summer sports betting lull, Tennessee collected $4.9 million in taxes on $206 million in wagers in August, getting toward a 2% return that one board member referenced to Thomas in the group’s September meeting.
“I do believe that the accounting and reporting changes that we implemented July 1, that has shown this increase in revenue in these July numbers,” Thomas said. “I’m pleased with that and hope to see it continue.”
In June, Tennessee collected $2.6 million in taxes on $216 million in wagers while it took in $4.8 million on $261 million wagered in May and $4.6 million on $293 million wagered in April.
“After we took over as the regulator in January from the Lottery, we looked at all aspects of our regulation of the sports betting industry as well as our operators’ business processes, including getting pretty far into the accounting weeds and how AGI numbers are calculated,” Thomas told The Center Square.
Tennessee calculates taxes based on the adjusted gross income for sportsbooks and the memo, dated June 15, defined how sportsbooks need to calculate the numbers including how it pertains to promotional bets given to gamblers as deposit bonuses, odds boosts, free bets and more.
Tennessee collects 20% of the industry’s net operator revenue in taxes. 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.
Thomas cited a report from the American Gaming Association stating that 46.6 million Americans, or 18% of the adult population, plan to wager on National Football League games this year, an increase of 3% from last year and 40% from 2020.
That means that wagers and state taxes collected are expected to increase as the fall continues. Both Gamewise (Betly) and Hard Rock Live began taking sports bets in the state recently, giving Tennessee 11 active operators with BallyBet and fubo approved but not yet operational.
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.
