TN Collected $68M In Sports Wagering Taxes In 2022

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The Center Square [By Jon Styf] –

Tennessee brought in more than $68 million in sports betting privilege tax in 2022, a 67% increase from the $40.7 million collected in 2021.

During a budget hearing in the Tennessee Legislature this week, Sports Wagering Advisory Council Executive Director Mary Beth Thomas said the oversight authority continues to fill already approved positions as her agency now has 12 staff members of the 20 approved in last year’s budget. She did not request any more staff positions or spending authority for next year.

“Our agency protects the public interest of Tennesseans,” Thomas said. “This year, our main focus has been on developing that compliance.”

Sports betting began under the authority of the Tennessee Education Lottery when it began in 2020, but authority shifted to the SWAC in 2022. One of the changes made in mid-2022 was a memo creating new standards for how earnings are reported by sportsbooks and how the taxes, based upon a sportsbook’s monthly adjusted gross income, are calculated.

The June 15 memo defined how sportsbooks need to calculate profit numbers, including how it pertains to promotional bets given to gamblers as deposit bonuses, odds boosts, free bets and more.

Before the memo, the highest monthly tax collection was $5.9 million in November 2021.

Since then, the state has continued to set records with $9.4 million in December taxes, $9.0 million in November and $8.7 million in September.

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.

The SWAC’s budget, however, is paid through annual operator license fees of $750,000 for the 13 sportsbooks in the state, which equals $9.8 million fees. The agency has the authority to spend $6 million annually and any of the licensure fees that are unused or above the $6 million threshold are transferred to the Tennessee Promise program.

In its first six months of operations to start 2022, SWAC spent $1.4 million while bringing in $3.7 million in fees, sending $2.2 million to Tennessee Promise.

“We’re operating at about 45% of our budget,” Thomas said.

Thomas said future staffing will be determined on the agency’s need of oversight as sports gambling technology advances after legal online sports betting first began in the U.S. in 2018. She said the additional budgeted positions are in accounting and technology.

“We may need to fill those positions,” Thomas said.

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