On Friday, Tennessee’s sports betting bill passed into law without a signature from Republican Gov. Bill Lee, who is about halfway through his first year in office.
The legislation, HB 1, allows for online/mobile sports betting, with no brick-and-mortar component. During an earlier stage in the legislative process, sports betting proponents were eyeing dozens of b&m wagering locations across the casino-less state. There were attempts to reinsert provisions for those facilities even after they were removed from the legislation, but the bill ultimately cleared the legislature with only internet gambling, making Tennessee the first in the country with an online-only law.
During the hearing process, it was known that proponents were working with Lee to try to craft a bill that he wouldn’t veto. During a gubernatorial debate last year, Lee said he was opposed to gambling and would consider vetoing a bill that reached his desk. He did suggest that he was willing to work behind the scenes on the issue to determine if there was a framework he could be OK with.
Long process pays off
Fortunately for sports bettors, that final bill was eventually crafted, after weeks and months of revisions. The legislation was transmitted to Lee on May 14, about two weeks after his team put out a statement, in the wake of the legislature’s approval of the proposal, saying that he would let it become law without a John Hancock. It wasn’t the most glowing endorsement of the state’s historic legislation, but it was enough for proponents of sports betting to avoid any worry of a veto.
On Friday, Lee put out a short, but notable, statement as the bill was set to pass into law. He wasn’t required to put out a statement, and he had already announced that he wasn’t going to sign. In his comments, posted to his Twitter account, Lee doubled down on his opposition to gambling, especially casinos.
“I am letting HB 0001 become law without my signature,” Lee said. “I do not believe the expansion of gambling through online sports betting is in the best interest of our state, but I appreciate the General Assembly’s efforts to remove brick-and-mortar establishments. The bill ultimately did not pursue casinos, the most harmful form of gambling, which I believe prey on poverty and encourage criminal activity.”
Of course, casinos in some states have sports betting. It’s unclear which casino game the governor sees as especially harmful. Slots? Table games? Whatever it is, Lee isn’t a fan. Perhaps it’s the skill component of sports betting that makes him feel more comfortable.
It’s worth noting that Tennessee has a state lottery, which will be the sports betting regulator. It’s well known that critics of the lottery characterize it as a tax on those with little personal wealth, a criticism not seen nearly as often with regard to brick-and-mortar, Las Vegas-style casinos. At any rate, Lee got what we wanted with no physical locations for sports gambling.
Lee has made no reference to the illicit sports betting market, but it’s safe to assume proponents of sports wagering were reminding him of its existence and of the fact that Tennesseans already gamble on sports.
Lee says he won’t sign future gaming bills
New Jersey‘s success so far in the world of sports wagering has played a key role in significant growth for online casino games such as slots and table games. While Lee’s comments appear to refer only to b&m casinos, you can interpret his comments to mean that he would not let the state authorize other forms of online casino gaming while he’s at the helm in Nashville.
It’s not the best news for companies in the internet betting space to hear, considering that sports betting margins are thin and other forms of online casino gaming are more profitable.
“Compromise is a central part of governing,” Lee continued in his statement, “but I remain philosophically opposed to gambling and will not be lending my signature to support this cause. We see this issue differently, but let me be clear: any future efforts to expand gambling or introduce casinos to Tennessee will assure my veto.”
Part of the reason why Lee preferred the 15-year-old state lottery serving as the regulator is an earlier version of the legislation called for creating a Tennessee Gaming Commission. That new regulatory body would have provided a natural stepping stone for future casino legislation.
A problem with Tennessee shutting the door on other forms of online gaming for the indefinite future is that sports betting operators will have to pay $750k each year for a license, as well as face a relatively high 20% state tax rate. Offering sports betting in Tennessee comes with a hefty price tag, which could be mitigated by allowing sites/platforms to offer other popular forms of iGaming.
Tennessee’s new law, which becomes effective in July, allowing for the state to begin crafting regulations, also gives the leagues a data mandate for in-game wagering. It’s a strike against the bill.
Potential future legislative efforts pertaining to reforming the state’s sports betting industry might be a tough sell with the governor’s position that he’s effectively done with gaming legislation.
Tennessee made history in 2019, about a year after the U.S. Supreme Court struck down the federal sports betting prohibition. Regardless of the drawbacks with the legislation, as well as Lee’s doubling down on his distaste for gambling, the recently completed legislative session was a huge win for the state and sports bettors looking for a legal way to wager.