The Tennessee legislature raised a few eyebrows last year when it opted to change its method of taxation from the traditional nationwide levy on revenue from sports betting operators, to one based on handle starting with Fiscal Year 2023-24.
Fast forward 12 months and the state’s Sports Wagering Council reported $87.6 million in state taxes for the recently completed fiscal year after $342.2 million handle for June generated $6.3 million worth of receipts. That was nearly $4.3 million higher than FY 2022-23, when tax revenue was based on 20% of operators’ adjusted gross revenue, and nearly $9 million more than what the state agency estimated for FY 2023-24.
“Regarding your question of whether tax collections have met expectations with relation to the switch – our answer is yes,” SWC Director of Engagement David A. Smith said in an email exchange with . ” … This streamlined tax structure allows our regulatory agency to focus on issues outside of tax accounting that protect the public interest: underage wagering, sports betting integrity, illegal sportsbooks, and responsible gaming to name a few.”
How Volunteer State Exceeded Expectations
There weren’t many fans of Tennessee’s previous method of taxation, but that had more to do with the state-mandated and much-derided 10% hold required than the 20% rate on AGR. Multiple operators were willing to pay a five-figure fine when failing to reach that win rate in 2022, when the state agency estimated it missed out on $11 million in tax receipts.