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With its progressive approach to sports betting taxation, the Tennessee legislature is creating a stir. Senate Bill 475 (SB 475), which is expected to establish a new tax structure for sports betting companies in the state, gained overwhelming support in the House. Tennessee wants to set a precedent by taxing bookmakers on their handle of wagers rather than their revenue.
The passage of SB 475 by the state Senate was a crucial step towards the legislation’s passage into law. The ultimate seal of approval was provided by Governor Bill Lee’s signature. A new tax structure that would completely alter the sports betting industry is about to go into effect in Tennessee.
In July, SB 475 will implement a slew of policy changes, including significant changes to tax and licensing fees. Notably, the industry’s supervisory agency will be dubbed the Sports Wagering Council (SWC), emphasizing the state’s commitment to strict regulation and governance. These measures are intended to increase tax revenue and fund state-led projects.
Currently, Tennessee sportsbooks are subject to a tax regime that requires them to pay 20% of their gross revenue and withhold 10% of their monthly revenues. SB 475, on the other hand, proposes a significant shift by abolishing the withholding requirement and replacing it with a dedicated gambling tax. Betting companies in Tennessee will be compelled to pay a monthly tax of 1.85% on their bets, determined depending on the handle, under the new legislation.
The measure also addresses licensing fees, proposing a new framework that takes an operator’s betting control into consideration. Sportsbooks previously paid a $750,000 license fee, but SB 475 institutes a tiered system based on betting volume. Operators who bet less than $100 million will pay a fixed charge, such as a $250,000 licensing fee. Renewal fees, however, are projected to rise as a result of the new law’s adoption.
While the new tax plan marks a watershed moment in the business, it may have ramifications for sports bettors. With greater expenses for operators, there is a chance of diminished bonuses, promotions, and potentially weaker odds. The long-term impacts on the entire betting experience, however, remain to be seen.
Tennessee’s progressive tax structure for sports betting companies is set to change the industry while also increasing state revenue. Tennessee establishes a precedent as the first state to embrace a handle-based tax scheme, which could influence other jurisdictions considering sports betting tax reform.