This Wednesday, the Tennessee Education Lottery Corporation approved sports betting regulation for the state, with an unusually high hold cap at 90%. The state will have an all-mobile betting market.

Board approves the legislation unanimously

The decision to approve sports betting legislation in the state was taken unanimously by the Tennessee Education Lottery Corporation board in a meeting held via conference call. When the payout percentage was posted last fall, one of the main issues with the draft was the 85% payout percentage on sports betting. Controversy emerged soon after the draft’s publications. On Wednesday, the board decided to set the cap at 90% for one year, which is still very high for US sports betting.

The national hold average, according to a study by industry analysts Eilers & Krejcik Gaming, is 7.5% but Tennessee will opt for a 10% hold. The two top gaming states of the country, Nevada and New Jersey have smaller holds at 6.3% and 6.9% respectively. The hold is defined as a number that operators get to keep after all wagers are settled with bettors. A 90% hold would mean 90 cents on every $1 bet.

Why high holds are a problem?

High holds are generally considered bad for the consumers because it makes the sportsbooks guarantee the money won which can impact their betting lines. The figure could also limit which operators want to work in the state, considering that other states have much lower limits. After controversy over the high hold during the comment period, it was expected that the hold will be adjusted to a more reasonable percentage like 95%. However, the authority’s decision did not live up to expectations.

Tennessee’s sports betting law has been in place since July 2019 but the state is yet to take its first sports bet. On Wednesday, Lottery officials said that they hope to be ready to start the first sportsbook as soon as legal sports resume. The state still prohibits racetracks and casinos and is the first all-mobile market in the US.

The board suggested that all operators will pay a license fee of $750,000 per year and gaming revenue will be taxed at 20%. The taxation amount is also higher than other states. The documents related to these decisions will be available next week. The state regulators will approve the operators seeking license. All approvals or rejections will be processed within 90 days.