Tennessee To Implement Mandatory Hold Percentage On SportsbooksOnline Sportsbooks In The Volunteer State Will Need A 10% Minimum Hold |
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Tennessee regulators are expected to release sports betting regulations this Friday, but one expected rule could likely crush the state’s online sports betting market.
According to The Action Network, the state is likely going to implement a mandatory minimum hold percentage of 10 percent for its sportsbooks. It would be the first state to implement this type of regulation in the country and some believe that it will destroy the health of the market.
The hold is simply the sportsbook’s revenue divided by the total handle. If this rule is put into place, a sportsbook that accepts $1 million in bets, must have revenue of at least $100,000.
It will lead to less competitive lines set by the sportsbooks and thus less action from gamblers. Many bets offered by books could have both sides listed as favorites just to ensure the minimum hold. According to multiple media outlets, the state originally was going to mandate a 15 percent hold. It was then dropped to eight percent before bumped to 10.
A study done by gaming analysts Eilers & Krejcik last January revealed that if the 15 percent mark was kept in place, the state would lose out on $11 million in tax revenue.
By comparison, Nevada sportsbooks average a 5.4 percent hold rate and New Jersey has been around 7 percent in its short sports betting history.
Gov. Bill Lee signed HB 1 into law in May 2019, which legalized online sports betting in the Volunteer State. It was the first state in the nation to sign an online-only sports betting bill into law. It spent the next 11 months working on its rules and regulations.
Those regulations will also include a $750,000 licensing fee and a 20 percent tax rate on gambling revenue. According to the New York Daily News, operators can begin applying for licenses next week. The state will have 90 days to approve those applications.
Luckily for sports bettors, the state said that it will revisit the regulations in a year and evaluate whether the rules need to be altered.
“While the state could conceivably raise the [90% payout] cap at some point in the future, it would be difficult to lower once expectations were met,” a spokesperson for Lt. Gov. Randy McNally told the Associated Press.
Before the COVID-19 pandemic, the state had originally planned on unleashing its sports betting market in March. Now, it looks as if July is the new target date.
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