Starting in July sports betting will be taxed differently in Tennessee.
A bill changing the way sports betting is taxed in Tennessee was signed into law by Governor Bill Lee earlier this month. Starting in July Tennessee will no longer apply a 20 percent tax on sports betting gross gaming revenue. Instead, a 1.85 percent tax will be applied to betting handle.
According to rough estimates if the handle tax had been in place instead of the tax on gross gaming revenue since 2020 the tax man would have collected an extra $15 million.
Tennessee will become the first state to apply the sports betting tax to betting handle. Similar handle tax proposals were brought forward in West Virginia, Kentucky, and Minnesota previously, but none were adopted.
The tax change isn’t only sports betting change coming to Tennessee. The bill that included the tax change, SB 475 also removed the minimum hold mandate that has been applied to online sportsbooks in the state since November, 2020.
The mandate required online sportsbooks to hold at least 10 percent of handle each month or face a fine. Nine of the 11 active sportsbooks in the state have paid the $25,000 fine for falling short of the minimum hold threshold at some point since 2020.
Also being dropped is Tennessee’s official league data mandate. The requirement to use official league data to settle bets was dropped after two sports betting operators, SuperBook and Betly complained to the Tennessee Sports Wagering Advisory Council that official league data for NFL bets was not available at a reasonable cost.
