Operators hoping to go live in Tennessee likely will not get a whole football season on the books after Tennessee Education Lottery CEO Rebecca Hargrove said Tuesday said it is shooting for a Nov. 1 go-live date.
Tennessee lawmakers legalized sports betting in July 2019, and it has been a bumpy road for regulators ever since. It became clear last month that the TEL would not meet its Sept. 1 deadline for allowing operators to go live, but there is a chance it could launch before the new target date.
At Tuesday’s Sports Wagering Advisory Council meeting, Hargrove also said that four operators and approximately 20 vendors and suppliers have applied for licenses. The names of the operators were not disclosed, but sources say BetMGM, DraftKings, and FanDuel have filed. The fourth company to file is a local Tennessee company, Tennessee Action 24/7, a free-to-play website filed with the Securities and Exchange Commission in December 2019, and shows on its website that the TEL is “currently processing our Sports Gaming Operator license application.” MGM tipped its hand a few weeks ago, when its latest quarterly report showed the company has market access and plans to go live in Tennessee this year.
Tennessee is the only state to legalize mobile-only sports betting, and for both DraftKings and FanDuel, getting to market ahead of one another is of paramount importance in terms of capturing market share.
Operators will be penalized if they don’t meet cap
Tuesday’s meeting was tricky to follow due to audio quality — like meetings across the country, the Advisory Council met virtually due to COVID-19 restrictions. But the Council discussed two key issues — the potential penalty if an operator cannot meet the mandated 10% hold and the dispute resolution process. Tennessee is the only state to put a cap on payouts to bettors. The cap likely means odds in the state will not be as competitive as they would be elsewhere.
The Council discussed a $25,000 penalty to operators if they go below the 10% hold. It is unclear if the regulations require the penalty would be for an operator who fails to meet the cap for a day, week, month, or year. Part of the discussion centered around the idea that a $25,000 annual penalty was merely a slap on the wrist, and if it is determined that the penalty would be meted out annually, that the TEL might want to go back to the state legislature to increase the size of the penalty. Council members seemed to agree the penalty should not be enforced on a daily basis, but there was no consensus on what time frame is most appropriate.
Since Tennessee lawmakers legalized sports betting, the TEL received lots of pushback for the cap and during the public-comment period for proposed rules. In addition, the TEL has seemingly struggled to find the right fit after it hired former associate director at UNLV’s International Center for Gaming Regulation Jennifer Roberts as director of sports betting in November.
Roberts resigned in late June, and the latest personnel change was the addition of Danielle Boyd as Vice President of Sports Betting in early July. Boyd was General Counsel in West Virginia when it was among the early adopters for sports betting and was most recently the Director of Government Affairs for William Hill.
The TEL Board of Directors meets Wednesday, and sports betting will be among the agenda items.