Tennessee lawmakers approve SB 475 to tax sportsbooks by handle instead of revenue
Embarking on a new way to tax sportsbooks, Tennessee lawmakers have passed an amended version of Senate Bill 475 (SB 475) that calls for the state to tax handle instead of revenue.
The Tennessee State House of Representatives voted 75-7 in favor of the amended version of SB 475 to enable the state exchequer to charge tax on handle. More precisely, the bill demands the state to switch from the existing 20 per cent tax on revenues to a 1.85 per cent tax on handle. It may be noted here that handle in gambling is the amount wagered each month.
It is also worth-mentioning here that the U.S. federal government places an excise tax of 0.25 per cent on each wager, but if Tennessee lawmakers’ new measure clears all hurdles and gets the signature of the stat governor, it would become the first state in the country to tax handle instead of revenue.
The new bill also aims to addresses two other items – officially changing the name of the Tennessee Sports Wagering Advisory Committee by eliminating the word “Advisory” from it as Representatives like Andrew Farmer (a Republican from Sevierville) believe that the Tennessee Sports Wagering Advisory Committee is actually no longer in an advisory position.
The bill would also lead to changes in annual renewal fee structure. If approved by the state governor, it would replace the flat $750,000 annual renewal fee, which is charged from operators, with a tiered structure. However, it remains uncertain when that will occur and whether the state’s Republican governor, Bill Lee, will sign it into law.
The amended version of SB 475 essentially mirrors HB 1362 – a reform bill introduced by Rep. Farmer. The new measure has already been approved by the Senate as well. The Senate approved all the changes regarding both the tax and the renewal fee, which the Sports Wagering Committee will likely set in the range of $375,000 to $750,000 based on operator revenues.
State Sen. John Stevens (R-Huntingdon), one of the bill’s sponsors, said, “It is my intent as the sponsor to concur with the House amendments.”
Tennessee gambling industry is growing quite fast. In March, bettors wagered $392.7 million through sports betting apps, up $65.3 million from February. For the same month, licensed sportsbooks reported $43.7 million in revenues, and the state received $8.8 million in tax.