The Tennessee Sports Wagering Advisory Council has voted in favor of maintaining a 10% hold requirement on sportsbooks in the state. It means the sportsbooks need to keep $0.10 of every $1 wagered. The standard hold for US sportsbooks is around 6%-7%, so it is challenging for the state’s legal sports betting sites to achieve a 10% mark.
They need to charge a lot of juice (the vigorish) and provide poor odds in order to hit that target, and they also claim it restricts promotional activity. Many operators have called for the rule to be scrapped, as it leaves them struggling to compete with offshore sportsbooks.
However, the council unanimously voted to approve a 70-page set of emergency rules at a meeting in Nashville on Thursday. The rules included the 10% hold requirement.
Hold of Just 6.2% in October
In October, Tennessee sportsbooks took a record $375.3 million in wagers. That smashed the previous record of $257.3 million set in September. The revenue on that $375.3 million handles was just $23.3 million. That equates to a hold of 6.2%, which is well below the 10% target.
Sportsbooks also narrowly missed the target in September, but they tend to hold more than 9% of wagers they take. Yet several sports betting sites in Tennessee are offering the same odds and bonuses that they provide in other states.
For example, BetMGM is offering -110 lines on NFL sides and totals, along with a risk-free bet welcome bonus worth up to $1,000, plenty of odds boosts, and a variety of ongoing promotions. How can these sportsbooks provide their normal lines and bonuses and still achieve the required 10% hold?
Fines for Failing to Hit the Target
It seems that some sportsbooks are not currently bothered about missing that target, which is good news for bettors in Tennessee. These sportsbooks will be fined $25,000 if they fail to achieve a 10% hold throughout the year, and they may have decided that is a small price to pay for the ability to offer competitive odds and bonuses.
The Tennessee Sports Wagering Advisory Council put the 10% hold rule in place to stop operators from operating at a loss in a bid to seize market share, according to accounts that it published. Yet the $25,000 fine does not currently offer much of a deterrent.
Regulators have considered increasing it to $25,000 per quarter, but many books would probably be happy to pay $100,000 per year for the ability to trade normally. The only issue they face is that the fines might count against them when they apply for licenses in other states.
The Tennessee Lottery will hand over control of the state’s sports wagering industry to the Tennessee Sports Wagering Advisory Council on January 1, 2022. Some operators hoped the council would vote to axe the hold requirement, but every member of the council decided to keep it in place.
Tennessee Hits $2bn Milestone
Tennessee broke through the $2 billion barriers in overall sports betting handle in October. It is the fifth quickest state to reach that milestone.
It currently has the seventh-largest handle, behind New Jersey, Nevada, Pennsylvania, Michigan, Colorado, Virginia, and Indiana, but it is also likely to be overtaken by Illinois and perhaps Arizona when those states report their October figures.
Yet calls for the 10% hold to be scrapped will not go away, as industry insiders claim it will spur competition, benefit customers and ultimately lead to a larger market, which could eventually result in more tax revenue for the state.