Tennessee’s New Governor Could Hold The Key To Legal Sports Betting

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Tennessee is one of at least 16 states that will elect a new governor this year.

Incumbent Gov. Bill Haslam has reached his two-term limit, and more than 30 candidates seek to succeed him. Haslam is a Republican, which bodes well for the opposing party’s chances based on history — Tennessee voters have not elected consecutive GOP governors since 1869.

Democratic front-runners Karl Dean and Rep. Craig Fitzhugh held a debate on Sunday night, and the moderator spent a few minutes on sports betting. If elected, both candidates seem keen to help lawmakers explore Tennessee sports betting.

Karl Dean on Tennessee sports betting

Karl Dean is the popular ex-mayor of Nashville who served two terms from 2007 to 2015. He’s running for governor on a moderate, pro-business platform that focuses on education, jobs, and healthcare.

Dean opened his response by framing the legal climate surrounding Tennessee sports betting:

I think there [are] a couple issues that have to be resolved first. First is whether there is a constitutional issue about whether we need a referendum or not. You can argue that one both ways, but that issue needs to be resolved.

Dean warned that sports betting wouldn’t be a “quick fix” for the budget, and he’s not even certain his prospective constituents have an appetite.

This is a state that has not embraced gambling, certainly not embraced casinos. We only recently allowed wine being sold on Sundays. I think we have got to go through a process where we respect the beliefs of the people of the state, figure out what people want, and understand what the law is.

That said, Dean realizes that potential revenue from sports betting already is escaping Tennessee. He was reminded of the lottery, which lawmakers approved to keep residents from “going to other states and spending their money there.”

He said sports betting would be “front and center” for the next year or so.

Craig Fitzhugh on Tennessee sports betting

Craig Fitzhugh is the minority leader in the state House of Representatives. He is a former Air Force captain, having served in the military from 1976 to 1980. He’s also on board with exploring sports betting.

“We are so limited in the ability to raise revenue in this state,” Fitzhugh said, using education to extend his point.

Every one of the candidates in this race says, ‘What are you going to do about teacher salary? We’re going to raise them.’

Well, you can say that, but if we have a recession … we’re going to have a downturn. We’re going to have to figure out how to do this. And this is one option we need to look at. We might even be able to direct it to teachers’ salaries, to give them that trust fund that we can use that money to keep their salaries going up.

Fitzhugh also echoed Dean’s understanding that folks in their state are already betting on sports.

Look, it’s happening in Tennessee now, we’re just not getting any revenue from it. And I don’t think you’re going to keep it from happening, so you might as well try to help the citizens of Tennessee by the revenue that we can claim from that particular activity.

A word of warning is due for Fitzhugh and others addressing the issue for the first time, however. While there is some revenue to be made from sports betting, pitching it as a tool to patch holes in a $37 billion budget is a recipe for disappointment.

Referendum or fast track?

Gambling is illegal under Tennessee law, and expansion requires a referendum at the ballot box. The constitution does not contain any special language excluding games of skill, so that argument is moot.

Voters have approved two such exemptions in the past: one for the lottery and another for limited pari-mutuel horse betting. Lawmakers bypassed a referendum when they passed daily fantasy sports legislation in 2016.

For his part, Dean thinks sports betting might have to work through the judicial system before it comes to lawmakers.

The issue about whether or not it requires a referendum, whether it requires a constitutional amendment, is one that will be decided by the courts ultimately. If somebody tries to do a fast-track, there will be a legal issue raised, and it will be resolved in the courts.

Resolution won’t come overnight, but activity in neighboring states is likely to drive the conversation.

To the south, Mississippi sports betting is fully legal and should go live in the next week or two. To the north, Missouri and Kentucky both considered sports betting bills this year, and the latter has formed a legislative panel to lead the charge in 2019. Bordering Virginia also has expressed a new appetite.

“When everybody else around us is doing it,” Dean said, “we’re going to need to do it, too.”

Fitzhugh is aligned there. “We’re probably going to have to do something quickly,” he added, “if it’s a constitutional amendment or some type of fast track, to make sure we don’t fall further behind in this issue.”