A bill to tax and regulate online sports gambling is headed to the Tennessee governor’s desk after narrowly winning approval from state legislators.

H.B. 1, which got final House and Senate approval on April 30, creates licensing requirements with a 20 percent privilege tax on operators of sports betting websites and apps, plus annual registration fees. The proposed law would apply to betting on professional and amateur sports events, including college sports.

Gov. Bill Lee (R) has reservations but plans to let the bill become law without his signature, spokeswoman Laine Arnold said April 30. The new law would take effect July 1.

The Senate passed the bill on a 19-12 vote, and the House gave its final approval by a vote of 51-40.

“The Governor has said he does not believe that the expansion of gambling is best, but he recognizes that many in the legislature found this to be an issue they want to explore further,” Arnold said in an emailed statement April 30.

Tennessee joins at least 10 other states that have acted to regulate and tax sports gambling since the Supreme Court’s 2018 decision in Murphy v. NCAA, according to Sen. Steven Dickerson (R), who sponsored the Senate version of the bill. That decision repealed the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibited states from authorizing gambling related to professional and amateur sports leagues.

Tennessee also legalized fantasy sports operations in 2016. That law imposed a 6 percent tax on fantasy sports operators’ earnings.

$50M Tax Impact Questioned

The Tennessee proposal would generate an estimated $50 million in tax revenue, Dickerson said, citing the state’s fiscal research office estimate.

But opponents on the Senate floor contended the other states that have legalized sports gambling have seen tax revenue come in well below their estimates.

Charles Armistead, an anti-gambling advocate, testified to a Senate committee April 24 that six states with active, legalized sports gambling markets generated only $32 million in tax revenue collectively for the past year.

“Why do we think we’re going to get $50 million?” he questioned the committee.

The bill puts the state’s lottery corporation in charge of drafting regulations and directs the bulk of the money to education, like the rest of the state lottery’s proceeds.

A number of lawmakers expressed concerns about promoting gambling addiction. Dickerson said Tennesseans already wager an estimated $3 billion per year on sports.

“It’s happening anyway. What this bill does, however, is bring it into the light and has provisions for troubled gamblers,” he said.

The bill would let the state identify problem gamblers and block them from gambling through state-licensed operators. It also dedicates 5 percent of the revenue generated by sports gambling taxes and fees to mental health treatment for people with gambling addictions.