Last Updated Jan 31, 2022, 4:16 PM

Tennessee Sportsbooks Miss the Mark on Minimum Hold

US Sportsbooks · Bonus Codes · Betting News · Special Update

Tennessee went live with legal online sports betting in November of 2020. One requirement of the new law was a minimum 10% hold by mobile sportsbook operators. The primary reason for this requirement was to boost the state’s tax revenue.

A sportsbook’s hold is the difference between the money paid out on winning wagers and the money collected on losing bets plus the standard 10% commission. This commission is also referred to as a sportsbook’s juice.

Under ideal conditions, a sportsbook can make more than a 10% hold on the betting volume taken in. However, when the results favor the betting public, the hold can drop well below that same rate.

Another major factor impacting a book’s hold is its promotional spending. Deposit bonuses, free-bet perks and risk-free betting incentives are all direct costs that work against the revenue taken in.

The legal Tennessee sports betting industry had a banner year in 2021 when it came to the betting handle. However, revenue from the monthly betting volume failed to meet the grade when it came to the 10% hold requirement.

The total sports betting handle in Tennessee reached $2.7 billion in 2021. The total reported revenue on that betting volume came in at $198.5 billion according to state gaming records. A simple calculation reveals that the total yearly hold percentage for the entire sportsbook industry was just 7.3%.

Under state law, sportsbook operators failing to meet the required 10% hold are subject to financial penalties and a violation of gaming regulations.

There are currently nine sportsbook operators in the state of Tennessee. This includes Wagr as the first peer-to-peer sports betting exchange. Wagr went live with its social sports betting platform towards the end of 2021.

The four operators that were in business in the state for the entire year are three national books, FanDuel, DraftKings and BetMGM along with Action 24/7 as an in-state betting option. These are the only four books that would be subject to any penalties for 2021.

Caesars Sportsbook also operates in Tennessee, but this platform did not go live until March of 2021.

The industry’s governing body in Tennessee is the Sports Wagering Advisory Committee (SWAC). This group took over control from the Tennessee Education Lottery on Jan. 1, 2021.

The stated fine for violating the 10% hold provision was $25,000. However, the SWAC added the option for a “true-up” payment. Operators can avoid being tagged with a violation by paying the difference between their actual hold and the 10% requirement.

This option may cost more, but it actually benefits the sportsbooks involved. They had previously voiced concerns over having a violation on their record. The primary concern was the impact that violation might have an any pending license application in other states.

Written by Dave Schwab, our US Sports Betting Industry Expert. You can learn more about our author's expertise here.

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