Changes Coming To Tennessee's 10% Wagering Hold Rule?

Tennessee legislators have proposed a change to the state's controversial rule that requires mobile sportsbook operators to have a 10% revenue hold each month. The proposed change would bring a unique taxation arrangement to Tennessee's sports betting market.

HB 1362 would remove the 10% hold rule and instead require that operators pay a monthly tax of 1.85% of handle. A similar bill in the Tennessee Senate, SB 475, would tax handle at 2%. It's worth noting that adjusted gross revenue in Tennessee is currently taxed at 20%.'

Based on calculations by Sports Handle, a 1.85% tax on handle would have led to tax revenue of $71.2 million in 2022. The state, with its 20% tax alongside the minimum 10% hold rule, reported $68 million in tax revenue in 2022. That's with several operators missing the mandatory minimum hold, though. The 2% handle tax would have generated tax revenue of $77 million.'

Total handle at Tennessee sportsbooks in 2022 2022 adjusted gross revenue (AGR) 2022 total state tax levied (20% AGR) Aggregate 2022 taxes if based upon 1.85% handle Aggregate 2022 taxes if based upon 2% handle
$3,850,547,905 $340,072,488 $68,052,961 $71,235,086 $77,010,958
Difference = Difference =
$3,182,125 $8,957,997

HB 1362 was “rolled to the heel” at Wednesday's House Finance, Ways and Means Subcommittee hearing, meaning it was pushed down the pile of bills to be heard by the committee. The bill doesn’t seem like an immediate priority, but it can be discussed later in the state's legislative session, which is set to end on May 4. SB 475 is set for a Senate committee hearing on Tuesday.'

The reason for the change

  
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