TN Sports Bets Stuck With Minimal Take, But There Is a Trade-off
Yes Tennessee‘s Sports betting advisory board agrees with its rule-making committee, TN sports betting will not get a stay of the state minimum ten% socket.
But the rules committee admitted hearing from the industry and found a compromise for a situation where the two sides could not have been further apart.
Most Tennessee online sportsbook wanted this one-time adjusted gross income withholding requirement to go away altogether. The committee, meanwhile, was considering changing the rule to include quarterly reports instead of checking for compliance every year.
Neither will happen. While the mandatory suspension and annual review will likely remain within the rules, operators may have the opportunity to correct any suspension issues without fines or formal violations.
This change and other small tweaks still require full SWAC approval. The council will take over the regulation of TN sports betting January 1st.
What are the options for TN sports betting?
Operators will have two choices if they are below the mandatory 10% withholding:
- Pay the fine, up to $ 25,000, as currently stated in the rule. This will likely be the cheapest option, but it will also count against this operator as a regulatory measure that other jurisdictions will see. This could impact a company’s ability to continue its sports betting expansion in the United States.
- Under the proposed change, operators could also pay the tax difference between what they would have paid if they had reached 10% and what has already been paid.
A hypothesis to illustrate that: the operator X takes $ 500 million bets from January 1 to December 31. The rule requires $ 50 million in adjusted gross income to be kept, sports betting income being taxed at 20%. This should lead to $ 10 million in taxes paid for the year.
Say that operator X reports only $ 40 million in AGI, however, with $ 8 million paid in lien tax for the year. The operator could either pay the fine of $ 25,000 and face these potential regulatory consequences, or pay $ 2 million close the gap in taxes owed.
Some operators will probably have to pay
Tennessee does not break down information by operator in its monthly reports, so it is not yet clear who will owe what. Statistics through October, however, suggest an underperformance on this mandatory wait.
Handle January through October is $ 2.023 billion with $ 152.4 million in AGI. It’s only a 7.5% hold on after NFL betting results favored the public last month.
Four operators entered the market last November and will see their grip for the year reviewed: