Exploring Tennessee’s Successful Transition to Handle-Based Taxation for Sports Betting

Tennessee Exceeds Expectations with New Sports Betting Taxation Method

In a surprising turn of events, Tennessee has exceeded expectations in the first year of its new sports betting taxation method. Last year, the state legislature made changes to their taxation system for sports betting, moving away from a nationwide levy on operators to a taxation based on handle. The results have been impressive, with the Tennessee Sports Wagering Council (SWC) reporting $87.6 million in state taxes for the recently completed fiscal year.

The switch to taxing based on handle has proven to be a successful move for Tennessee. The previous method of taxation, which included a state-mandated 10% hold requirement, was not well-received by operators. Many were willing to pay fines rather than meet the desired win rate, resulting in missed tax revenue for the state. By shifting to a handle-based taxation system, operators no longer have to deduct promotional bonuses and credits, leading to increased tax receipts for the state.

One of the key factors in Tennessee’s success with the new taxation method is the increase in wagering volume. The SWC initially predicted a 5% increase in the handle, but the actual numbers exceeded expectations due to higher than anticipated wagering activity. As a result, Tennessee has seen a significant boost in tax revenue compared to the previous fiscal year.

SWC Director of Engagement, David A. Smith, expressed satisfaction with the results, stating that the streamlined tax structure allows the regulatory agency to focus on important issues such as underage wagering, sports betting integrity, illegal sportsbooks, and responsible gaming. Tennessee is now the only state taxing based on handle, setting a new standard in sports betting taxation.

Overall, Tennessee’s decision to switch to a handle-based taxation system has proven to be a wise move, resulting in increased tax revenue and a more efficient regulatory process. As the state continues to see success with this new method, other states may look to follow suit in the future.