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Tennessee becomes quickest in U.S. to hit $200 million sports betting month

24 Feb 2021

(PRESS RELEASE) -- Tennessee's online sportsbooks hit a fresh high in January, becoming just the seventh state to generate more than $200 million in sports bets in a single month while extending its record launch to three months, according to analysts from PlayTenn, which offers news and analysis of the fledgling Tennessee gaming market.

"Tennessee continues to be among the most surprising ascents of any U.S. sports betting market," said Jessica Welman, analyst for PlayTenn.com. "The records won't last, as Michigan already proved by snapping Tennessee's record for a debut month. But the industry is off to a better start in the Volunteer State that anyone could have expected."

Bettors placed $211 million in wagers in January, according to official data released Tuesday evening by The Tennessee Education Lottery. That is up 16.6% from $180.9 million in wagers in December. Those wagers produced a record $21.8 million in the operator revenue, up 56.8% from $13.9 million in December, which in turn generated $4.3 million in state taxes.

Tennessee's pace remains historic through three months. January's results pushed lifetime gross sports betting revenue to $49 million and wagers to $523 million, topping Indiana's $274.2 million, which was the previous record for a market's first three months. The momentum should continue. Volunteer State bettors showed significant interest in February's Super Bowl, wagering more than $15 million on the big game, producing a "win" of nearly $3 million, according to unofficial preliminary data released by the TEL.

Interestingly, the unexpected Kansas City loss helped sportsbooks easily attain a 20% hold for the event, which should help them meet the 10% overall hold requirement in February.

But Tennessee's market faces its first headwinds, too. Most notably, Virginia launched online sports betting in January, the first of Tennessee's neighbors to do so.

"The near-perfect conditions Tennessee enjoyed in its first two months were never going to last forever, but continued growth even as competition rises remains encouraging," said Dustin Gouker, analyst for PlayTenn.com. "It's early, but it appears that the market has plenty of room for growth, even if more nearby states regulate sports betting themselves."

The TEL does not report results from individual sportsbooks, but it appears that BetMGM is faring particularly well. In a year-end earnings call, BetMGM reported that its Tennessee sportsbook collected $70 million in January bets, representing about one-third of the state's entire handle. That would presumably place it in a heated competition with rivals FanDuel and DraftKings, the nation's two largest sportsbook operators, in addition to local operator Action 24/7.

Those operators could have new avenues to generate wagering, too, including the possibility of allowing sports betting pools, perhaps even ahead of March Madness.

"Young markets are expected to evolve, especially in the first few months, but adding pools could add a significant revenue generator for operators," Welman said. ""The Tennessee Lottery realizes the appeal of legal betting pools in a state obsessed with college sports and March Madness, so it will do its best to get that approved in time for the Big Dance. Regardless, it is smart to try to capitalize on the state's early momentum with new innovations."
 
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