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Tennessee emerged in the spring as a dark horse “legal Sports Betting state” through the passage of SB 16, which legalized sports wagering in the Volunteer State for mobile/online applications only, becoming the first piece of legislation of its kind in the U.S. As the deadline nears for the submission of public comments on the draft regulations released in late November, there are growing concerns among stakeholders and sports bettors that plans for the future of the legal market in the state may fall into a cloak of darkness — ultimately creating a fundamentally flawed market with few options and little reason for celebration.
The chief concerns are threefold. First, tucked on page 42 of the 47-page draft regulations is 15.1.11, “Rule Governing Capped Payout,” which says “Sports Gaming Operator’s aggregate annual payout shall not exceed 85%.”
Those nine words and one number appear to require that a state-licensed operator keep at least 15 percent of total wagers made at a sportsbook annually. In existing U.S. markets, no such requirement exists, and a typical sportsbook annual hold is about 5-7 percent (or payout is roughly 93-95 percent). The inescapable conclusion is that imposing such a requirement would ultimately damage patrons as well as licensed operators who would have to manage a requirement antithetical to the industry standard. Whether through grossly inferior pricing, the slashing of promotions or other creative ways of keeping more cash away from consumers, this likely would threaten the long-term viability or at least ceiling of the Tennessee legal Sports Betting market itself.
Dovetailing with that 85 percent requirement, there is a clause (15.1.12) stating that if there is a tie in one leg of a parlay wager (a bet where multiple picks are combined, and none may lose for the bettor to cash on his wager), the bet would be deemed a loss. The industry standard goes that if one part of a multi-leg parlay ties or “pushes,” whether there are two games or 10 in the parlay, that leg gets cancelled and the remainder of the wager gets adjusted, but survives.
While this rule may seem innocuous, parlays are wildly popular as they let bettors, often recreational players, wager a little to win a whole lot, and the “House” overall banks a higher proportion of these bets for the promise of such upside. The rule would change the fundamental nature of the parlay for bettors and Sportsbooks alike.
The third key concern addressed herein, from a broader institutional level, is trepidation within the industry that the Tennessee Education Lottery Corporation (TELC), tasked with regulatory oversight over Sports Betting and crafting the regulations, may be headed toward a limited market or perhaps even a single sportsbook model (“sole-source”), which would be contrary to what the legislature apparently tried to accomplish in its historic legislation that became effective on July 1 (codified in Public Chapter 507).
Tennessee emerged in the spring as a dark horse “legal Sports Betting state” through the passage of SB 16, which legalized sports wagering in the Volunteer State for mobile/online applications only, becoming the first piece of legislation of its kind in the U.S. As the deadline nears for the submission of public comments on the draft regulations released in late November, there are growing concerns among stakeholders and sports bettors that plans for the future of the legal market in the state may fall into a cloak of darkness — ultimately creating a fundamentally flawed market with few options and little reason for celebration.
The chief concerns are threefold. First, tucked on page 42 of the 47-page draft regulations is 15.1.11, “Rule Governing Capped Payout,” which says “Sports Gaming Operator’s aggregate annual payout shall not exceed 85%.”
Those nine words and one number appear to require that a state-licensed operator keep at least 15 percent of total wagers made at a sportsbook annually. In existing U.S. markets, no such requirement exists, and a typical sportsbook annual hold is about 5-7 percent (or payout is roughly 93-95 percent). The inescapable conclusion is that imposing such a requirement would ultimately damage patrons as well as licensed operators who would have to manage a requirement antithetical to the industry standard. Whether through grossly inferior pricing, the slashing of promotions or other creative ways of keeping more cash away from consumers, this likely would threaten the long-term viability or at least ceiling of the Tennessee legal Sports Betting market itself.
Dovetailing with that 85 percent requirement, there is a clause (15.1.12) stating that if there is a tie in one leg of a parlay wager (a bet where multiple picks are combined, and none may lose for the bettor to cash on his wager), the bet would be deemed a loss. The industry standard goes that if one part of a multi-leg parlay ties or “pushes,” whether there are two games or 10 in the parlay, that leg gets cancelled and the remainder of the wager gets adjusted, but survives.
While this rule may seem innocuous, parlays are wildly popular as they let bettors, often recreational players, wager a little to win a whole lot, and the “House” overall banks a higher proportion of these bets for the promise of such upside. The rule would change the fundamental nature of the parlay for bettors and Sportsbooks alike.
The third key concern addressed herein, from a broader institutional level, is trepidation within the industry that the Tennessee Education Lottery Corporation (TELC), tasked with regulatory oversight over Sports Betting and crafting the regulations, may be headed toward a limited market or perhaps even a single sportsbook model (“sole-source”), which would be contrary to what the legislature apparently tried to accomplish in its historic legislation that became effective on July 1 (codified in Public Chapter 507).
