Online sports betting becomes legal in Tennessee on Monday, but you won’t be able to place a wager from your smartphone just yet.
The state is still creating specific licensing rules and sports wagering regulations, so online sportsbooks might not be up and running until early next year.
This spring, the Volunteer State joined a series of states that legalized forms of sports betting after a U.S. Supreme Court decision last year gave states the green light to move ahead with legalizing and regulating sports wagering.
The Tennessee General Assembly passed a bill in April to legalize online sports betting only. It does not allow for brick- and-mortar sportsbooks.
Gov. Bill Lee let the bill become law but declined to sign it, saying he is “philosophically opposed to gambling and will not be lending my signature to support this cause.”
Supporters of the new law point to illegal online sports betting that already exists and say regulation will bring wagering into the sunshine.
“People are doing it anyway,” said Daniel Kustelski, CEO and co-founder of the Nashville-based company Chalkline Sports. “It’s really a function of whether or not the state wants to reap the rewards of the taxes.”
Kustelski, who has closely followed the development of sports betting laws, said the new rules can also offer better protections for players who have lacked protections with unregulated betting.
“It’s about putting together rules and regulations in order to manage sports betting and protect the customers,” he added.
The Tennessee Sports Gaming Act takes effect Monday. Here’s what we know so far:
Who can play?
There’s two basic requirements you’ll need to meet if you want to place a bet — you need to be at least 21 and physically present in the state when making a wager.
Most people should be able to place bets, but the new law lists several kinds of individuals who can’t participate due to inherent conflicts of interest, like a person who can impact the outcome of a game and professional athletes wagering on an event overseen by their sport’s governing body.
Sportsbooks will need to use geo-location and geo-fencing technology to ensure their online wagering services are only accessible from inside Tennessee.
Where can you place bets?
An operator must obtain a license to operate in the state. However, the Tennessee Education Lottery Corp. — which is tasked with regulating online sports betting — is still “working to create the requirements and processes that will be necessary for the licensing and regulation of the online sports wagering,” said Kym Gerlock, the state lottery’s spokeswoman.
The law also calls for the creation of a nine-member sports wagering advisory council, which will advise the lottery corporation board on best practices in sports wagering and provide administrative and technical assistance.
Gerlock said she didn’t yet have a timeline for when the public can start placing bets, and that information will be posted on the Tennessee Lottery’s website as it becomes available.
DraftKings and FanDuel may be some of the sportsbooks eyeing an expansion into the Tennessee market. According to records from the Tennessee Ethics Commission, both companies had lobbyists registered in the state this year.
Kevin Hennessy, director of publicity for FanDuel, said in an email that “there is nothing to comment on at this time.”
DraftKings did not return an email seeking comment on sports betting in Tennessee.
What can you bet on?
Rules vary across different states, but generally speaking, operators offer bets on professional football, basketball, golf, hockey, and soccer, among other sports. College basketball and football are also popular.
State law does prohibit a few types of wagers. Bets can’t be placed on injuries, penalties and other types of wagers deemed “contrary to public policy,” “unfair to consumers” or in violation of the state constitution.
In-game proposition bets are prohibited for collegiate sports. A “proposition bet,” or “prop bet,” is a bet on the occurrence or non-occurrence of an event during a game that doesn’t directly impact the game’s ultimate outcome [for example, whether a specific team will be the first to score in a game].
Where will the money go?
The state will collect a 20% tax on the adjusted gross income of a licensee. Eighty percent of the tax revenue will go into the state’s “lottery for education account,” 15% will go toward local governments for infrastructure projects and 5% will go to the Department of Mental Health and Substance Abuse Services to help people with problem gambling or gambling disorders.
State officials estimate Tennessee will collect about $50 million in taxes and fees each year as a result of the new law. However, an Associated Press investigation earlier this year found that collected tax revenues were lower than expected in four of six states that legalized sports betting.
When can you start betting?
The state lottery hasn’t released a specific date for when consumers can expect sports betting to be up and running. An analysis by the General Assembly Fiscal Review Committee from April noted that “Due to the effective date of this legislation, it is assumed that sports gaming will not commence and be available to bettors until January 1, 2020.”
Kustelski, of Chalkline Sports, also said he doesn’t anticipate that consumers will be able to place online bets in Tennessee until the first quarter of 2020.
He cautions people in Tennessee to be aware of whether the online services they are using are legal and licensed to operate in the state.
“Sometimes, people hear that it is legal and so they think that every product on the internet where they can wager on sports is legal, but that’s simply not the case,” he said.
He added, “Just because it is legal does not mean that it is licensed and legal in Tennessee yet. And licensed and legal operators will only be operating in Q1 [of 2020], so if you are betting on sports right now, you’re probably doing it illegally, if you’re living in the state of Tennessee.”
What happens to the rule breakers?
A licensee who fails to follow the law — for example, by accepting wagers from minors or people otherwise ineligible to place sports bets — can be investigated by the lottery corporation board and face administrative fines. The board can also revoke licenses.
The law prohibits the transmission of non-public information [like playbooks or confidential medical information] for the purpose of wagering. Violating this ban can result in a Class A misdemeanor. People who violate ineligibility rules, like an athlete betting on their own sport, can also potentially face misdemeanor charges.
Sullivan County District Attorney General Barry Staubus said he doesn’t anticipate dealing with many criminal cases resulting from the law and that most of its provisions call for administrative fines in response to violations. Nevertheless, he acknowledges it’s a new statute for the state.
“How it will play out, we’ll just have to see,” he said.