Since Tennessee legalized sports betting in 2020, Georgians have been jumping the state border to get in on the action — and may soon have more incentives to do so. Legislation approved by the Tennessee General Assembly that eliminates the 20% tax rate and 10% minimum hold was signed by Governor Bill Lee on Thursday.
While this is good news for Tennesseans and Georgians who head North to place legal wagers, it’s yet another sign of the potential Georgia sports betting tax revenue that the state will again miss out on.
What was in the legislation?
SB 475, which was introduced to the Tennessee legislature in January and passed through the State Senate with a 30-0 vote, removed the 20% adjusted gross income tax requirement from sportsbooks, instead taxing 2% of the operator’s betting handle. It also removed the controversial component of the original bill, which meant that sports betting operators had to hold 10% of money handled annually.
The removal of the 10% hold was a big win for sportsbooks, as many struggled to comply with the mandate.
With Tennessee amending the method and means of taxing sports betting wagers, bettors in the state will ostensibly see a positive impact as operators will no longer be forced to adhere to a complex set of taxation rules. Per Legal Sports Report, many of the state’s online sportsbooks simply elected to pay a $25,000 annual fine as opposed to maintaining a 10% hold, which has cost the state over $22 million in tax revenue over the last two years.
Why it matters for GA sports betting
For Georgians left without legal betting options, the adjusted tax structure on handle instead of AGI means lower immediate tax burden and penalties for operators in Tennessee — making that trip up north even more enticing for bettors.
While Tennessee has not legalized retail sports betting outlets, online sportsbooks were being hit with a 20% tax on revenue, upping operating costs. Add in the 10% hold requirement on handle and it’s proved a heavy lift for the state, which is lagging behind other sports betting states in tax revenue generation.
The new law means that Tennessee is in line for an increase in tax revenue. A 2% tax on handle, as opposed to AGI, would have provided Tennessee an additional $75.4 million last year. By scrapping the 10% mandatory hold in favor of a 2% tax on handle, the state is likely to see the tax benefits that other states have enjoyed since passing sports gambling legislation.
Georgia misses out…again
Stacey Abrams made legalizing Georgia sports betting a cornerstone of her ultimately failed campaign. While the campaign was in full swing, Abrams jabbed Governor Brian Kemp over Georgians heading to Tennessee to bet for the Bulldogs, sending their tax dollars to the Volunteer State in the process.
It was an intriguing angle on what’s become a familiar frustration for Georgians looking to place wagers. This is not legally possible in their state, so they have to head out of town.
The crux of Abrams’ argument is that Georgia Bulldog fans would have to travel into enemy territory to place a wager on their team and send their tax dollars to the State of Tennessee by doing so. That’s money that could be used in Georgia to benefit Georgians.
What’s next for Georgians?
Georgians will either need to head to Tennessee or, potentially, North Carolina to place legal wagers on sports. Hope will spring eternal during the 2024 General Assembly, when legislators can potentially pass a bill to include a ballot initiative to amend the State Constitution.
Until then, crossing the state lines will prove an enticing alternative, and Tennessee will reap the benefits of Georgia’s failure to again enact legal sports betting legislation.
