What legal online sports betting in Tennessee means for college and pro teams
Tennessee Titans center Ben Jones figures that sometime next season, teammate Ryan Succop will make fans some money. He’ll convert a field goal that will result in a gambler winning a wager.
Succop doesn’t know about all that, but he expects legal online sports betting in Tennessee to ratchet up interest in football.
It’s one thing to root for your favorite team to win. It’s an altogether different experience to have money on the line.
“I’m sure we’ll probably have more people watching games,” Succop said.
Sports teams and colleges across the state are preparing for the change with mixed emotions. Some welcome legal gambling in Tennessee as a way to regulate and monetize a practice that was already occurring, whether through an illegal bookie, at a casino in another state or via the internet to an offshore, online sportsbook. Others are wary of what it will mean to protecting the integrity of games.
What changed?
Gov. Bill Lee plans to allow a Tennessee sports betting bill to become law without his signature. Both houses of the Tennessee legislature passed a bill last month permitting online sports betting, beginning July 1.
Bets will be placed online only and not at physical locations. Tennessee does not have casinos.
Sports betting operators will pay a $50,000 application fee, plus a $750,000 annual licensing fee. Licensed operators will be able to accept bets from people 21 and older via internet websites or phone apps. Technology will limit wagers to those physically within the state.
“The fact that it would be online only or mobile only would be further attractive to especially the younger consumer, because everyone is on their phone now anyway,” said Cody Havard, an associate professor of sport commerce at the University of Memphis.
“I understand the appeal of walking into a casino or walking into a (sportsbook) to place a bet, but I don’t know if that is as important to younger consumers.”
The path to legal sports betting in Tennessee dates to May 2018, when the U.S. Supreme Court issued a ruling killing a federal law that had limited full-scale sports betting to Nevada for 25 years. A few other states had more restricted sports betting.
The high court’s ruling allowed states to legalize sports betting at their discretion.
Tennessee will collect a 20% tax of a sports betting operator’s adjusted gross income. That tax revenue is projected to bring in an estimated $50 million annually, which will be set aside for education, infrastructure projects and gambling addiction treatment.
Rhode Island, New Jersey, Delaware, Pennsylvania, West Virginia, Mississippi, New Mexico and Nevada have legal single-game sports betting up and running. Indiana and Washington, D.C., joined the ranks last week. Tennessee, Montana, New York, Arkansas and Oregon are on deck.
What Grizzlies, Predators are saying
The Memphis Grizzlies organization welcomes state-approved legal sports betting as a “new opportunity for economic growth and fan engagement.”
Nashville Predators CEO Sean Henry supports the move, too. For one, he said, some sports fans have been making illegal sports bets via bookies or wagering with offshore sportsbooks. Better to harness that activity and direct tax revenue to Tennessee schools, he said. Henry thinks sitting on the sideline while other states legalize sports betting would be a missed opportunity.
“When something happens and there’s a new movement — whether that’s gambling or legalizing other things — while it may not pay off to be the very first to do something, because everyone is learning from your mistakes, it definitely pays not to be one of the last,” Havard said.
NBA Commissioner Adam Silver supported the Supreme Court’s decision last May to nix the federal law restricting full-fledged sports betting to Nevada.
“When done appropriately, (sports betting is) a very acceptable form of engagement for American sports fans and consumers,” Silver said.
The NBA and Major League Baseball unsuccessfully pushed last year to receive 1% of the total amount legally wagered on their games as an “integrity fee.” Such a fee is not included in the Tennessee legislation. Even without an integrity fee, leagues and teams can benefit.
“Anything that draws more attention to what we’re doing is a positive outcome,” Henry said.
In-game proposition bets will be prohibited during college games. Such bets will be allowed during professional games. Tennessee’s legislation will require gambling operators to judge those bets by using official league data, which leagues can monetize. (An example of an in-game prop bet would be wagering on whether Grizzlies guard Mike Conley will make over or under 2½ 3-pointers during a game.)
Other revenue streams exist, too. MLB, NBA, NHL and MLS have signed sponsorships with MGM, which counts casinos among its holdings. The NFL has a sponsorship with Caesars.
“It’s not about revenue for us; it’s about growing our audience,” said MLS Commissioner Don Garber, whose league will include a Nashville franchise beginning with the 2020 season. “Our sole focus is growing our audience, growing our relevance in our local markets.”
Preserving games’ integrity
Titans CEO Steve Underwood’s top concern is what more widespread, legalized gambling means for the integrity of NFL games.
“What can we do to make sure that we protect public confidence in our game and make sure that only official data is used to determine the outcome of bets?” Underwood said.
University officials wonder whether legal sports betting will create a need for more oversight from individual institutions.
“All of us would have to beef up our compliance departments,” Middle Tennessee athletic director Chris Massaro said.
Phil Fulmer, Tennessee athletic director, through the years
Tennessee athletic director Phillip Fulmer said in a statement that UT is working with its Office of Government Relations “to gain a thorough understanding” of how legal sports betting will affect UT athletics.
“As we learn more, we’ll be deliberate about properly educating student-athletes and staff to ensure compliance,” Fulmer said.
Vanderbilt’s athletic department said in a statement that sports betting is covered as part of compliance education with athletes, coaches and department staff. Legal sports wagering heightens the importance of that education.
Massaro would welcome the state helping educate universities about the legislation and its oversight.
“What we don't want is to have some kind of gambling or fixing scandal at one of our universities,” Massaro said. “I think that would be very damaging.”
When it comes to the integrity of the game, there are multiple levels of concern. Most obvious is the risk of a player taking bribes to manipulate the outcome of a game or point shave. A perhaps more concerning integrity threat pertains to information: Players, coaches, team personnel, trainers, doctors and others associated with teams possess inside information about player availability, strategies and the like — intel that’s valuable to the gambling sector.
The NCAA is considering a mandated availability report, which would ward off gamblers’ need to obtain that information through backchannels. The NFL requires teams to provide an injury report.
Sports betting remains banned within the NCAA for athletes, coaches, athletic department staffers, conference staffers and non-athletic department employees who have responsibilities pertaining to athletics, such as school chancellors or presidents.
Professional leagues also have rules to protect the integrity of games and prohibit athletes, coaches and league personnel from betting on games within their league.
Out of the darkness, so now what?
Some Tennessee residents are established sports bettors, having placed illegal bets with bookies or wagered online with offshore-based sportsbooks, like Bovada.
Those established gamblers might stay with their bookies or offshore sportsbooks due to familiarity or brand loyalty. Bookies can provide discounted juice (the house’s commission) and the possibility of tax-free earnings. Bookies also generally offer a bet-now, pay-later system.
State-approved gambling options, however, will allow bettors to wager comfortably within the law and enjoy state protections. It also will add visibility to sports betting.
It’s the equivalent of moving the milk from the back corner of the supermarket to right inside the front door. Put differently, sports betting is moving out of the darkness and into the light.
Havard expects that will result in more people being comfortable discussing sports betting and their gambling habits.
More visibility and dialogue, plus the security of a state-backed system, will result in more money being wagered, and from a broader audience.
And, as Succop forecasted, it’s another way to bring eyeballs to games.
“There are going to be people that are the more casual fans or observers that this will be something that will attract them to consume the games,” Havard said.
“The people who are interested in doing things like fantasy sports and all of that, now there’s something else they can do on their phones or on their tablets that will allow them to engage with the product.”
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