Tennessee Has Third-Best Sports Betting Handle Ever in January

Tennessee sports betting apps surpassed expectations in January despite a reduced NFL schedule, achieving their third-highest total betting handle for the month.

In the January report from the Tennessee Sports Wagering Council, it was noted that sports betting activity in the Volunteer State decreased from December to January, but saw a significant increase compared to the previous year.

In January, the NFL stood out as the top performer on Tennessee’s best sports betting platforms. However, the overall sports betting scene in Tennessee received a boost from the Tennessee football team’s victory in the Citrus Bowl on Jan. 1, as well as successful outings by the Tennessee and Memphis men’s basketball teams.

Tennessee records 3rd-best handle ever in January

In January, sports bettors in Tennessee wagered a total of $465.8 million at the state’s top sportsbooks, marking the third-highest monthly total since the legalization of mobile-only sports betting over three and a half years ago.

November saw $517 million in sports betting revenue and December saw $493.3 million, making them the best months for sports betting in Tennessee. These numbers are particularly impressive given the large number of promotions offered by Tennessee sportsbooks during the NFL season.

Sports betting activity in January decreased by 5.6% from December’s $493.3 million, which was during the NFL season. However, it saw a 13.4% increase from the $410.8 million in wagers accepted in January 2023.

Nearly $9 million in taxes from Tennessee sportsbooks

Tennessee is among the small number of states in the U.S. that no longer releases monthly reports on gross sports betting revenues for its providers. The Tennessee Sports Wagering Council has also ceased reporting on sportsbooks’ winnings.

The only other measurable that we can compare month-to-month are the taxes paid by Tennessee’s top sports betting apps, as the regulators have made the process somewhat confusing and convoluted.

In July, Tennessee transitioned from a conventional tax system where a portion of gross gaming revenue is taxed to a new method that may seem puzzling. Under the new format, 1.85% of the state’s total handle is allocated to the state’s Lottery for Education Fund (80%), a general fund for local governments (15%), and the Department of Mental Health (5%).

Tennessee mobile sports wagering providers contributed nearly $8.6 million in privilege taxes to the legal sports betting haul for January.

Tax contributions in the Volunteer State decreased month-over-month due to a slight drop in handle. In November, $9.5 million in taxes were generated from a record handle haul, compared to $9.1 million collected last month from the state’s $495 million sports betting handle.

After factoring in January’s numbers, Tennessee has become the fifth state to surpass $200 million in tax revenue from its legal sports betting platform, joining New York, Pennsylvania, New Jersey, and Illinois in reaching this milestone.

Debate in the state over taxes

There is a lot of controversy surrounding whether the new system is bringing in more tax revenue for Tennessee. The prevailing belief among locals is that the state’s new system has resulted in a significant amount of untapped tax revenue since its implementation in July.

Basic calculations demonstrate that the previous tax system would have generated significantly higher revenue for the tax programs that rely on a thriving legal sports betting industry in Tennessee.

In theory, if Tennessee’s January handle had a 9% hold rate, which is slightly below the average of other reported jurisdictions, tax revenue would have been around $42-$43 million.

The number is notably higher than the $8.6 million that Tennessee sports betting apps paid out in January.