Chief of the servants Bill Shelter Signs Costs to Update Tennessee Gambling

Since Tennessee legalized gambling in 2020, Georgians have been crossing the state border to participate in the action, and they may soon have even more incentives to do so. Legislation that eliminates the 20% tax rate and 10% minimum hold, which was passed by the Tennessee General Assembly, was signed by Governor Bill Lee on Thursday.

While this is good news for Tennesseans and Georgians who travel north to place legal bets, it is yet another indication of the potential gambling tax revenue that Georgia may once again miss out on.

What was within the legislation?

HB 475, which was introduced to the Tennessee legislature in January and passed the State Senate with a 30-0 vote, eliminated the 20% adjusted gross revenue tax requirement for sportsbooks. Instead, it implemented a 2% tax on the operator’s betting handle. Additionally, it removed the controversial provision of the original bill that required gambling operators to hold 10% of funds wagered annually.

The removal of the 10% hold requirement was a significant victory for sportsbooks, as many struggled to comply with this provision. With Tennessee amending its approach to taxing gambling wagers, bettors in the state will experience a noticeable impact, as operators will no longer have to navigate a complex set of tax rules. According to the Legal Sports Report, several of the state’s online sportsbooks have opted to pay a $25,000 annual fine instead of maintaining the 10% hold, which has resulted in the state losing over $22 million in tax revenue over the past two years.

Exactly why it issues for GEORGIA sports betting

For Georgians who are left without legal betting options, the revised tax structure on handle instead of AGI (adjusted gross income) means a reduced immediate tax burden and penalties for operators in Tennessee. This makes the trip up north even more enticing for bettors.

While Tennessee has not legalized retail sports betting shops, online sportsbooks were previously subject to a 20% tax on revenue, which increased operating costs. In addition, the 10% hold requirement on handle added to the financial burden. This has resulted in the state lagging behind other gambling states in terms of tax revenue generation.

The new law signifies that Tennessee is poised for an increase in tax revenue. The implementation of a 2% tax on handle, instead of AGI, would have generated an additional $75.4 million for Tennessee last year. By eliminating the mandatory 10% hold in favor of the 2% tax on handle, the state is likely to experience the tax benefits that other states have enjoyed since the enactment of sports gambling laws.

Georgia does not show for out… once again

Stacey Abrams made legalizing gambling in Georgia a cornerstone of her ultimately unsuccessful campaign. As her campaign was in full swing, Abrams took a dig at Governor Brian Kemp regarding Georgians going to Tennessee to gamble on the Bulldogs, thereby sending their tax dollars to the Volunteer State.

It was an interesting angle on a familiar frustration for Georgians who want to place bets but cannot do so legally in their own state, forcing them to travel out of town.

At the heart of Abrams’ argument is the fact that Georgia Bulldog fans have to venture into enemy territory to place a wager on their team and in the process, contribute their tax dollars to the State of Tennessee. This is money that could be used in Georgia for the benefit of Georgians.

What’s following for Georgians?

Georgians may either have to head to Tennessee or, possibly, North Carolina to place legal bets on sports. Hope may spring eternal during the 2024 General Assembly when representatives could potentially pass a bill to include a ballot initiative to amend the state Constitution.

Until then, crossing the state lines will remain an enticing option, and Tennessee will benefit from Georgia’s failure to once again enact legal gambling legislation.