The most recent TN sports betting meeting at the Tennessee Education Lottery focused on how its board should be relieved of its regulatory duties.
Members from the TEL and the Sports Wagering Advisory Council agreed they should move forward with the expectation the council will be the regulating authority on sports betting.
That is the likely outcome after SB 588 passed both chambers and is awaiting Gov. Bill Lee‘s signature.
Did council want TN sports betting authority?
The SWAC is a council appointed by multiple lawmakers to give advice to the TEL board and weigh in on possible situations concerning sports betting in Tennessee.
That changes next year if the legislation is passed. It is not even clear if this was something the nine members even wanted.
“We didn’t have a hand in the legislation,” Billy Orgel said. “A lot of this, as it got drafted, was news to all of us.”
TEL ‘very happy’ to give away responsibility
TEL CEO Rebecca Hargrove sounded pleased to remove those regulatory duties from her plate:
“We are elated with the legislation as it passed. We believe our organization is an operational organization that acts more as an operator than a regulator. So to have a regulator regulating sports betting is a very positive outcome.”
“So we are very happy and are anxious to work with you on how to best implement what you need to implement.”
Hargrove explained throughout the nearly two-hour meeting how the TEL was understaffed to handle TN sports betting as well. It had just two employees dedicated to sports betting, which was fine with four operators, she said. Now with seven and another four applications pending, sports betting in Tennessee is starting to draw resources away from the Lottery.
The SWAC has a long list of duties to take care of before it takes over as regulator Jan. 1. That includes looking at the rules to see if changes are needed and hiring a staff, which should be no smaller than 12 people, Hargrove said.
Hargrove: Hire someone with knowledge first
Hargrove’s suggestion is to hire an executive director first, preferably one that has a background in sports betting.
“You might make some decisions with zero sports betting operational knowledge in terms of regulating so then an executive director comes in and goes ‘Wow! Why did you hire six attorneys?’”
Getting someone who understands sports betting is even more important than it sounds for the SWAC. The members have no background in sports betting or even gaming, according to a Play Tennessee story.
It is even more crucial in Tennessee considering the current regulator is not quite up to speed on its own rules. That is what put the TEL on the losing end of a legal battle after it incorrectly handled the suspension of Action 24/7.
Will TN sports betting regulation be in limbo?
Hargrove had TEL General Counsel Alonda McCutcheon come up with a list of day-to-day sports betting duties for the SWAC.
It will be up to the SWAC to decide which duties the TEL will continue doing during the transition – if any at all.
“If we want to stop all applications until you’ve promulgated your rules and take over by those rules January 1, we’ll do that,” Hargrove said. “We don’t have to do any more applications if you don’t want us to.”
There are four operator applications pending review with a fifth application delivered to the Lottery Tuesday.
Peer-to-peer to TN sports betting market?
It sounds like whether peer-to-peer betting is allowed will be up to the new regulators.
There’s nothing in the statute that says peer-to-peer betting goes against the law, McCutcheon said. As long as the statute is followed and there’s a tax paid it would be considered a lawful activity.
There are two pending peer-to-peer applicants that want to be approved for traditional sports betting. They would then offer peer-to-peer betting as well if Tennessee became the first market to regulate and allow it.
Tennessee fastest to $1 billion handle
April’s handle was $172 million, according to preliminary numbers offered by Hargrove. That puts total handle just shy of $1.1 billion since its Nov. 1 launch, making TN sports betting the fastest to $1 billion in handle.
There are some caveats to that, of course, as not every state launched with mobile betting. Three of the biggest operators – BetMGM, DraftKings Sportsbook and FanDuel Sportsbook – went live at launch as well.
Tennessee’s launch also came at a terrific time of year. Launching in November meant its first six months included half of the NFL season, the NFL playoffs and the Super Bowl, as well as the vast majority of March Madness action.
