November 1 is a big day for sports betting. A new state will come online and arguably the most unique state to adopt legal sports betting.
Tennessee will begin taking sports bets on November 1. What makes Tennessee so unique is that there are no casinos or gaming facilities in the Volunteer State. This will be the first fully online and mobile state for sports betting. Licenses were acquired by operators through the Tennessee Education Lottery. The TEL will be the governing body for all things sports betting going forward, including the licenses for new operators and they will settle any disputes that arise.
Tennessee is going to be a fascinating market for industry insiders to follow. As you would expect, we’ll be following Tennessee very closely. The idea of a state that has no gaming facilities, but decided to go ahead with plans to legalize sports betting is really quite interesting. Expansions of gambling in Tennessee have never really met a ton of support, but sports betting moved forward rather quickly.
Operators have to pay a pretty low license fee of $750,000. That will be good for the consumer as sports betting grows in Tennessee because the low costs to enter the market will create a competitive environment.
On the other hand, something we’ll have to watch very, very closely is the mandatory 10% hold percentage that the operators have to reach, otherwise they could face fines and other penalties, including, in extreme cases, the loss of a license.
That will be bad for the consumer. The typical hold percentage for a sportsbook is somewhere in the 5-7% range. In order to reach the 10% requirement, the expectation is that the sportsbooks will pass the burden on to bettors. The standard vigorish, also called juice, on a game is -110. The theoretical hold on -110 is roughly 4.55%. In essence, the juice serves as the “house edge” in a lot of ways. Bettors get back $10 in winnings for every $11 in wagers.
In order to reach the 10% target, we’re likely to see a standard vig in Tennessee of -115 or even higher depending on the operator. We may see caps on parlay payouts and futures odds. We’ll probably see more of a push for parlay betting in general. For every giant winner that you see bandied about in the sports betting media, there are thousands upon thousands of dollars in parlay ticket losses.
Many bettors will not realize the difference between Tennessee and other states or simply won’t care. The convenience of being able to bet on sports from home instead of having to commute to another state or Las Vegas will be worth the extra “tax” placed on wagers with higher vig. It will be something that bettors have to contend with, though, and we want our readers to know the difference. If you live in Tennessee and want to bet on sports, you really won’t have a choice, but it will be something discussed in certain circles.
In any event, Tennessee’s inclusion in the legal U.S. sports betting world will be a good test case for states like Virginia, that will be starting soon, or places like South Carolina or Georgia that do not have any brick-and-mortar casinos. There are various riverboats to gamble on, but no actual gaming facilities on the mainland.
For states that do not have casinos, a fully online and mobile state like Tennessee will provide some good data as to how things should be run and how sportsbooks will operate in that sort of environment.
What can we expect from the first operators in Tennessee?
DraftKings & FanDuel
It will be a toss-up between FanDuel and DraftKings to see which operator gets the bulk of the market share. In most states with both operators, FanDuel and DraftKings hold 80+% of the market share. Because of their presence in daily fantasy sports, they were well-known commodities with larger player databases of gamblers before PASPA was even overturned in May 2018.
Both operators spend a lot of money in advertising, thus they also reach more potential consumers in that regard. They will be instant hits in Tennessee, especially because of the DFS presence. Other operators tied to brick-and-mortar properties or nationwide and international gaming corporations are likely to lag behind.
An operator like DraftKings offers a pretty robust deposit bonus up to $1000, split between a risk-free bet and a deposit bonus. We should expect to see the same in Tennessee.
For example, BetMGM has licenses to operate in New Jersey, Indiana, Colorado, West Virginia, and Nevada. Only in Colorado does MGM not have its own gaming facility. There they partnered with Midnight Rose Casino. Typically, we see MGM with its own properties and satellite holdings. With no existing presence in Tennessee, it will be interesting to see how much of a market share they can grab. Obviously everybody has heard the name, but will they sign up there over somewhere like DraftKings or FanDuel?
With the increased vig expected in Tennessee, bettors will need to set themselves up with accounts at multiple sportsbooks for the purposes of line shopping. Not all sportsbooks will have the same methods of reaching the mandatory 10% hold percentage and that should create opportunities to line shop for the best prices.
BetMGM has up to a $500 risk-free bet for new sign-ups and depositors in the states in which they are active. The same would be likely in Tennessee.
Action 247 is an entity exclusive to Tennessee. It is also Tennessee-owned and operated. Action 247 has two different sportsbooks on the website, one where you can play for real money and one where you can play for free with the chance to win real money.
Not much is known about Action 247 yet and it will take some time to see how they carve out a niche in Tennessee. The fact that they allow free play to learn the ropes of sports betting may be really beneficial in terms of creating an audience and a user base.
What You Can Expect From Us
As Tennessee continues to grow, we will cover the progress from the Volunteer State. We’ll also review and rate the different sportsbooks and highlight the best sign-up and deposit promotions.
Let us be the first to welcome Tennesseeans to the wonderful world of sports betting.