The Tennessee gambling landscape is a land of contradictions. On one hand, the in-person gambling options are quite limited with not a single casino or racetrack to be found anywhere in the state. On the other hand, Tennessee is home to a growing number of online betting options that include mobile sports betting, fantasy sports, and horse racing betting.
The in-person gambling options in Tennessee consist of a state lottery that was established in 2003 and a limited selection of charitable games such as raffles and cakewalks. This is one of the few states in the Union that even bans charitable bingo and poker games. With this in mind, it should come as no surprise that social poker games are similarly outlawed.
Forms of gambling that are legal in Tennessee:
- Sports betting (online and mobile)
- Horse racing betting (online and mobile)
- Fantasy sports (online DFS and in-person)
- Lottery (in-person)
- Limited charitable gaming (raffles, cakewalks and cakewheels)
Online Gambling in Tennessee
Legal online gambling options in Tennessee actually outnumber what’s legal in person, surprisingly enough. Although the state’s legal code is quite restrictive regarding what is and is not considered gambling, lawmakers have shown a willingness to embrace legislation to authorize certain types of online betting.
Mobile sports betting was legalized in 2019 to make TN the first state to pass a bill authorizing online betting only. With no brick-and-mortar casinos but a clear desire to get in on the sports betting rush, lawmakers opted for mobile sportsbooks instead.
Shortly thereafter, major sports betting operators such as DraftKings Sportsbook were quick to confirm they would pursue Indiana licenses.
Four online sportsbooks applied for TN sports betting licenses and launched in November 2020:
- Tennessee Action 24/7
The Tennessee Lottery has also issued licenses to three other sportsbook providers who should launch soon:
- William Hill Sportsbook
- TwinSpires Sports
This is much the same story for online horse racing betting in TN. A lack of physical racetracks leaves horse racing fans with online betting options only.
Licensed racing betting sites in TN:
Daily fantasy sports were legalized in 2016, just months after the Attorney General declared such games to be a form of illegal gambling. The AG opinion motivated the legislature to pass a law to legalize DFS contests and require operators to apply for licenses.
Licensed DFS sites in TN:
- SportsHub Technologies (operator of numerous smaller DFS brands)
- StarStreet LLC (DRAFT.com)
- Yahoo! Fantasy Sports
Tennessee Sports Betting
After the Supreme Court overturned the federal sports betting ban in May 2018, Tennessee did not seem like a likely contender to become one of the early adopters of legal sports betting considering the state’s strong anti-gambling streak.
A total lack of casinos, racetracks and not even a state lottery until 2003 all seemed to indicate little desire among lawmakers to expand the state’s gambling options.
That all changed in 2019 when the legislature approved a bill allowing mobile sports betting. Under the law, any number of qualified betting operators may apply for licenses to offer their wares to customers 21 or older. The first Tennessee online sportsbooks opened for business on November 1st, 2020.
A fiscal note attached to the bill estimated legal TN sports betting would generate up to $50 million per year in new state revenue with the majority of that going to fund public education. The remaining revenue has been earmarked for mental health services, substance abuse programs and college scholarships.
Local pro sports teams also welcomed the legislation despite the leagues’ previous opposition to sports betting. Both the Memphis Grizzlies and Nashville Predators issued statements after the law was passed stating they anticipate increased economic growth and fan engagement as a result of legal sports betting.
Mobile Betting Only
The passage of that law in 2019 made Tennessee the first state to legalize mobile sports betting without any brick-and-mortar component whatsoever. Although Tennessee lacks actual casinos, mobile-only was not necessarily the only way forward.
In-person betting kiosks were considered at one point, but lawmakers ended up stripping that langue from the bill during negotiations before passing it into law. In the grand scheme of things, a lack of in-person sportsbooks will likely make little difference considering the preponderance of mobile devices today.
Data from other states with legal sports betting have shown the vast majority (upwards of 80%) of all wagers are placed online even when physical sportsbooks are an option. Cody Harvard, Associate Professor of Sports Commerce at the University of Memphis, put it best when he said this:
“The fact that it would be online only or mobile only would be further attractive to especially the younger consumer, because everyone is on their phone now anyway. I understand the appeal of walking into a casino or walking into a (sportsbook) to place a bet, but I don’t know if that is as important to younger consumers.”
How Tennessee Sports Betting Works
- Minimum sports betting age: 21
- Where to bet: Online via licensed betting websites and mobile apps
- Sportsbooks may offer wagers on: Professional and college sports, esports, and Olympic Games
- Sports betting regulatory body: Tennessee Education Lottery Corporation (TEL)
- Location requirements: Customers must be located within state lines to place wagers
- Residency requirements: Customers do not need to be TN residents; they must only be located on Tennessee soil when placing wagers
Tennessee passed legislation in 2019 legalizing and regulating online sports betting. Under state law, customers 21 and older may bet online with licensed providers from anywhere within state lines.
Lawmakers authorized online and mobile betting exclusively because the state lacks an established brick-and-mortar casino industry. Whereas most other states authorize sportsbooks at casinos and other physical locations, Tennessee sports betting is limited purely to the internet via licensed betting websites and mobile sportsbooks.
Currently, there are no plans to authorize retail sportsbooks for in-person betting.
State law does not cap the number of operators that may apply to offer sports betting in Tennessee. Still, the 20% tax rate and annual $750,000 licensing fee may dissuade some operators from applying for licenses.
Horse Racing Betting in Tennessee
Horse racing betting has had a tough time gaining any traction in Tennessee despite the state’s rich racing history. Tennessee had an active horse racing industry throughout the 19th century, where one could find no fewer than nine racetracks in Knoxville alone.
That all changed in 1905 when the state outlawed racing betting. Horse racing itself remained legal, but every single track eventually shuttered without the critical financial support provided by parimutuel wagering. What was once a bustling industry in Tennessee had been completely and fully destroyed by the betting prohibition.
Lawmakers attempted to revive the industry by passing the Racing Control Act of 1987 to legalize wagering once again and establish a process by which new racetracks could be built.
The Act ran into problems almost immediately.
First, racetracks could only be constructed if voters approved them through a county referendum. Most track proposals were shot down by voters, and those that did make it through the referendum process ran into financial trouble before they could even begin construction.
Lawmakers finally repealed the Racing Control Act in 2015 to close that chapter on racing betting in TN. Governor Bill Haslam signed a bill into law in 2018 to revisit the feasibility of parimutuel wagering and horse racing, but any progress made on that front was quickly overshadowed by the specter of legal sports betting.
Advance Deposit Wagering in TN
State law does not specifically address the legality of advance deposit wagering (online horse racing betting), but most of the country’s major racing betting sites are open to Tennessee residents.
The following horse racing betting sites hold licenses in at least one US state and are largely trusted as the industry’s most reputable providers. All work closely with racetracks in the US and abroad to accept wagers online that are comingled with each track’s betting pools, thereby ensuring customers are paid at full track odds.
Tennessee had laws on the books at one point authorizing pari-mutuel wagering at racetracks, but TN lawmakers repealed that law in 2015, and now it is unclear where advance deposit wagering stands. However, the site listed above have bases of operation in the US, and the state has declined to take action against them to date.
Daily Fantasy Sports in TN
Tennessee law requires all daily fantasy sports (DFS) sites to be licensed in order to offer real money contests. To date, the country’s major DFS sites have all obtained licenses and now accept customers who are 18 or older.
The daily fantasy industry has been fairly fortunate in Tennessee given the state’s stringent laws on gambling. Sites such as FanDuel and DraftKings hit the mainstream in 2014 and openly operated in Tennessee for a good two years until Attorney General Herbert Slatery III issued an opinion declaring fantasy contests to be a form of illegal gambling.
The opinion pointed out that Tennessee law considers activities that involve risk, reward and any degree of chance whatsoever to be gambling. From the opinion:
“While participants may use skill to select players for their teams, winning a fantasy sports contest is contingent to some degree on chance. Namely, the participants do not control how selected athletes perform in actuality on a given day. Athletes’ performances are affected by many fortuitous factors – weather, facilities, referees, injuries, etc.”
This opinion nearly killed daily fantasy in Tennessee, but the state legislature moved quickly to give DFS operators legal cover. A law passed later that year granted DFS an exemption from anti-gambling statutes, initiated a licensing process and established some basic consumer regulations such as requiring operators to keep players’ funds segregated from sites’ operating funds.
About the TN Lottery
The Tennessee Lottery was formed in 2003 and the first lottery tickets were sold later that year. The first batch of games offered to the public were simple, instant-win games that generated nearly $11 million worth of sales on the very first day.
TN launched the first draw game in 2004 and joined the Multi-State Lottery Association (MUSL) one month later in order to bring Powerball drawings to Tennessee. Within three years, the TN Lottery began routinely topping $1 billion in sales per year.
Revenue generated by the Tennessee Education Lottery (TEL) goes to fund education efforts such as grants and scholarships, after school programs and the Drive to 55 initiative.
The TN Lottery also runs a voluntary charitable giving program in which participants can register to have a portion of their winnings donated to registered charitable organizations. Charitable organizations can request a set amount or a fixed percentage of 5%+ from winnings of greater than $5,000 from players who have opted into the program.
Charitable Gaming in Tennessee
Tennessee’s strict gambling laws also apply to charitable gaming. Registered charitable organizations may only operate a few forms of charitable games – and just once per year at that.
The only types of charitable games allowed by TN law are:
- Raffles: Each participant purchases a ticket to enter, and prize winners are determined by random drawing
- Reverse raffles: Each participant purchases a ticket to enter and a random drawing is then held to eliminate tickets. The last ticket(s) drawn are the prize winners. Basically, you do not want to hear your ticket number when playing in a reverse raffle.
- Cakewalks: Numbered squares are arranged in a circle on the floor and participants who purchased tickets walk around the circle while music plays (sort of like musical chairs). When the music stops, everyone stops at the nearest numbered square. A number is drawn at random and the person with the corresponding number on the floor wins a prize.
- Cakewheels: A game in which players pick numbers and a big wheel is spun. The holder of the winning number wins a prize.
It is important to note that Tennessee does not offer detailed instructions on ensuring a fundraising game is compliant with state law. All charitable gaming activities must be approved ahead of time, and at that point the state will notify the organizers if the game is not compliant.
If you’re interested in participating in a charitable event, you can find a calendar of approved upcoming events on the Tennessee Department of State website here.
Tennessee Gambling Law
Tennessee gambling law draws very distinct lines between what is legal and what is prohibited. The legislature has specifically legalized certain forms of gaming and betting, but most gambling activities remain strictly prohibited.
The simplest way to describe Tennessee gambling law is if an activity hasn’t been specifically legalized with new legislation, it is probably illegal. Tennessee law maintains a strict definition of the word “gambling” that does not leave much leeway for games that have not been authorized through the legal process.
Tenn. Code Ann. § 39-17-501 defines gambling as follows:
“Gambling is contrary to the public policy of this state and means risking anything of value for a profit whose return is to any degree contingent on chance, or any games of chance associated with casinos, including but not limited to, slot machines, roulette wheels and the like.”
What’s troublesome here is the “to any degree” portion of that definition. In other states, gambling is usually defined as something based predominantly on chance. In Tennessee, any element of chance whatsoever is enough to classify an activity as gambling.
This definition is so strict that in 1990, the TN attorney general ruled turkey shoots and fishing tournaments played for money to be illegal gambling (Tenn. Att’y Gen. Op. 90-08 [Jan. 22, 1990]).
TN Sports Betting Law
Tennessee legalized sports betting in May 2019 with the passage of HB 0001, also known as the Tennessee Sports Gaming Act.
This law was the first of its kind as it authorized online and mobile betting with no provision whatsoever for in-person sportsbooks. This also made Tennessee the first state in which qualified gaming operators may apply for sports betting licenses without having to partner with an existing brick-and-mortar casino.
That’s the good news for operators. The bad news is they pay quite a bit for opportunity to offer mobile sports betting in Tennessee. Licenses cost operators $50,000 up front and must be renewed at a cost of $750,000 per year.
All licensees are also required to purchase official data from the sports leagues in order to settle in-play wagers.
Additionally, mobile sports betting providers operate under a “privilege tax” of 20% on adjusted gross income. Tax revenue generated for the state is earmarked as follows:
- 80% goes to the Lottery for Education account to promote public education
- 15% is distributed to local county and cities throughout TN on a per capita basis to be used for local infrastructure projects
- 5% goes to programs for mental health and substance abuse
Licensed TN betting sites are also subject to a standard set of rules designed for consumer protection and sporting integrity:
- Customers must be 21 or older to bet on sports in TN
- Wagers may not be accepted from athletes and other sporting officials who may have a direct impact on games
- Prop bets on college sports are prohibited
- Sports leagues may request the board to prohibit certain types of wagers if the league is concerned such wagers may affect the integrity of the game
- Betting operators may not extend credit to customers
- Betting operators must provide self-exclusion programs
- Online and mobile wagers may only be accepted from people who are physically present within TN state lines
The Tennessee Sports Gaming Act also specifies which types of payment methods may be accepted by mobile betting apps:
- Electronic bank transfers
- Debit cards
- Online and mobile payment systems
- Any other method approved by the board
Legalizing sports betting in Tennessee was achieved soley by the General Assembly, which made it much easier for the bill to pass into law. At one point, it was questioned whether or not the legislature could legalize sports betting without a constitutional amendment and the question was sent to Attorney General Herbert H. Slatery III for an opinion.
Specifically, the question was whether or not sports betting would constitute a form of lottery under TN law. If so, legalizing sports betting would require a constitutional amendment. If not, the TN legislature would be able to proceed with legislation to legalize sports betting.
Had the AG decided that a constitutional amendment was necessary, the process of legalization would have been made much more difficult. As we saw with the legalization of the lottery, that outcome would have required the General Assembly to approve a voter referendum across two separate sessions.
Assuming the General Assembly could have agreed on such a bill two separate times, the question would have then been put to the voters for their input. A negative vote could have shot down sports betting in TN for the foreseeable future and we wouldn’t be where we are today with legal online sportsbooks.
The AG opinion ended up being somewhat of a dud as it failed to reach a definitive conclusion:
“In sum, whether a particular sports betting contest comes within Tennessee’s constitutional prohibition of lotteries would turn upon the particular facts of the contest as it is actually conducted. If chance is the dominant factor in determining the outcome of the contest, the contest constitutes a lottery and, absent an amendment to the Tennessee Constitution, the General Assembly may not authorize the contest solely through legislative action. If skill is the dominant factor in determining the outcome of the contest, the General Assembly may legalize the contest solely through legislative action without a constitutional amendment.”
However, this left enough of an opening for the General Assembly to proceed with HB 0001 and legalize sports betting. Legal sports betting dodged one last bullet after the law was sent to Governor Bill Lee, who was opposed to any gambling expansion, for his signature or veto.
Governor Lee ended up allowing the bill to pass into law without his signature. He made it clear that while he didn’t particularly love the idea, he was willing to let the legislature have its way. Governor Lee’s press secretary put it this way:
“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. He plans to let this become law without his signature.”
The Questionable 90% Rule
Most Tennessee sports betting law aspects are conducive to a healthy and competitive industry, with one major exception found in the regulations adopted by the TEL.
§ 15.1.9 of the TN sports betting regulations states:
“The aggregate annual payout of each Licensee shall not exceed 90%.”
This one line significantly disrupts a fairly reasonable sports betting landscape for Tennessee bettors by mandating a 10% hold. This means that for every $100 a sportsbook takes in wagers, and it may pay back no more than $90 as winnings to customers on average.
By comparison, the Nevada sports betting industry has averaged an annual hold of about 5-6% over the last 20 years, according to figures from UNLV.
This unnatural mandate forces sportsbooks to provide worse odds to their customers rather than allowing the market to determine how much is returned to players. Consider that the average line for a roughly even money event in Nevada is about -110 on both sides, Tennessee bettors will be looking at lines closer to -120 or even worse just so sportsbooks can meet their mandated minimum 10% holds.
Additionally, sportsbook operators are likely to push their holds above 10% because sports betting can be an unpredictable business. Operators cannot control the hold on any single event, such as when heavily bet favorites come through for the win to give sportsbooks a loss. Operators are likely to push their average holds above 10% to give themselves some margin of error.
This single rule has an outsized negative impact on what is otherwise a reasonable regulatory environment – and makes it unnecessarily difficult for licensed TN sportsbooks to channel potential customers away from unlicensed offshore betting sites.
Filing Disputes with Operators
Tennessee sports betting regulations provide a formal process for resolving disputes between customers and sportsbooks. Under TN Rules and Regulations 15.2.9, customers may file formal complaints with operators involving the amount of a wager, promotions, application of house rules, technology functions, transactions, or any other matter “important to the player.”
Under the rule, customers must first file complaints with operators and receive assistance from the operator to correctly format the dispute. If a patron is not satisfied with an operator’s response to a complaint, the customer may file a formal complaint with the Tennessee Education Lottery here.
Racing Betting Law
Tennessee was home to a vibrant horse racing industry until the state banned all parimutuel wagering in 1905. The prohibition killed the racing industry outright and today not a single racetrack remains in operation.
The legislature attempted to revive horse racing with the passage of the Racing Control Act of 1987, but the law achieved now lasting effects as local referendums blocked the construction of several tracks while other tracks ran into financing trouble before they could break ground.
After more than a decade spent overseeing absolutely nothing, the Tennessee State Racing Commission was disbanded in 1998 and the Racing Control Act of 1987 was repealed in 2015 to effectively close the chapter on organized racing in TN.
The one surviving artifact of Tennessee’s rich racing history is legal online betting. Despite the 1905 prohibition and the repeal of the Racing Control Act, the major racing betting sites accept customers from Tennessee to this day.
This has created the current situation that is not unlike sports betting: racing fans cannot bet on horses in-person at a track but do have access to legal racing betting sites that are headquartered right here in the USA.
Fantasy Sports Law
The Tennessee Attorney General opinion declaring fantasy sports to be illegal gambling under state law prompted lawmakers to move quickly on DFS legislation that had been introduced earlier in 2016.
The Fantasy Sports Act took effect in July 2016 and established the Division of Charitable Solicitations, Fantasy Sports and Gaming (“the Division”) to oversee the industry. Additional regulations adopted by the Secretary of State layout the guidelines by which fantasy sites must operate and how licenses are issued.
Fantasy Sports Regulations
Between the Fantasy Sports Act of 2016 and additional rules implemented by the Secretary of State, Tennessee fantasy sites operate under a well-regulated environment.
Licenses and Fees:
- All DFS operators must apply for licenses from the secretary of state
- Initial and renewal licensing fees range from $1,000 to $75,000 based on total annual adjusted revenue generated from TN customers
Consumer Protection Regulations:
- Customers must be 18 or older to participate in DFS contests
- An individual player may deposit no more than $2,500 per month unless the player provides sufficient proof that the player has an annual income of more than $150,000 or a financial net worth greater than $500,000
- Fantasy operators must segregate players’ funds from operating funds
- DFS sites must verify each customer’s identity and location
- Fantasy sites must provide beginners-only contests
- Fantasy sites must conspicuously identify “highly experienced players” and prevent them from participating in beginners-only contests
- “Highly experienced players” are defined as customers who have entered more than 500 contests or who have won more than five contests with total winnings of at least $2,500
- Customers must be given the option to self-exclude from participating in DFS contests
- Players with insider information or the ability to impact the outcomes of games (athletes, league officials, employees of sports teams, etc.) must be prevented from participating in DFS contests
A list of licensed TN fantasy sports sites can be found here.
Tennessee law does not address poker specifically, but general gambling laws have effectively banned the activity across the state. The state’s strict definition of “gambling” combined with a complete lack of casinos means there is no place to play poker legally in TN.
Furthermore, there are no charitable or social exceptions to the statewide prohibition of gambling. Any poker game played with real money in Tennessee violates state law. In 2005, the Attorney General confirmed poker meets the state’s definition of gambling in this opinion.
Participating in a poker game in Tennessee is considered participating in unlawful gambling and is a Class C misdemeanor.
Assisting or enticing others to gamble is considered a “gambling promotion” offense and is a Class B misdemeanor.
Managing, supervising or otherwise participating in a gambling enterprise is considered “aggravated gambling” and is a Class E felony. Anyone considering holding a home poker game should note the state defines a “gambling enterprise” as two or more people regularly engaged in promoting gambling.
Sentences for these offenses can be found in TN Code § 40-35-111.
- Participating in gambling (Class C misdemeanor): Up to 30 days in jail; up to $50 fine
- Gambling promotion (Class B misdemeanor): Up to six months in jail; up to $500 fine
- Aggravated gambling promotion (Class E felony): One to six years in prison; up to $3,000 fine
TN Lottery Law
Tennessee began the process of establishing a state lottery in 2000 with the introduction of legislation calling for a statewide referendum that would ask voters if they would like to amend the state constitution to authorize a lottery.
The General Assembly approved that legislation and carried it over to the next session for a second vote as required by TN law. Lawmakers approved the legislation again in 2001 to finally approve the referendum.
Voters approved the referendum in 2002 and the state got to work passing new legislation to create the Tennessee Education Lottery Corporation (TEL). The first board of directors was then chosen and outside vendors were brought in to manage the TN Lottery on behalf of the TEL.
Under TN law, net revenue from the lottery after prizes and other expenses is earmarked for educational efforts. In its most recent fiscal report, the TN Lottery allocated total revenue as follows:
- 63% was paid to players as prizes
- 26% went to public education
- 7% went to retailers
- 4% funded lottery operations
Charitable Gaming law
- TN Charitable Gaming FAQ
- Application to Organize a Charitable Gaming Event
- Rules for Operating Charitable Gaming Events
- Tennessee Nonprofit Gaming Law
Tennessee has some of the most restrictive charitable gaming laws in the nation. The Tennessee Nonprofit Gaming Law allows qualified 501(c)(3) and 501(c)(19) organizations to hold one charitable gaming event per year, and even that one event must first be approved by a two-thirds vote in the General Assembly.
Additionally, the only types of games that may be held by a charitable event are raffles, reverse raffles, cakewalks and cakewheels. Other game types such as bingo, pull tabs, video lottery games, online games and any games commonly found in casinos are all prohibited.
An organization wishing to host a game must file an application and submit it along with a $50 application fee to seek approval from the state. The state will then require an additional fee sized according to the organization’s gross revenue from the event.
- Gross revenue of $0 – $5,000: $100 fee
- Gross revenue of $5,001 – $10,000: $250 fee
- Gross revenue of $10,001 – $20,000: $400 fee
- Gross revenue of $20,001+: $550 fee
TN Gambling FAQ
TN Problem Gambling Help
With Tennessee’s legal gambling options growing, effective problem gambling resources are needed more than ever now. If you or someone you care about may have a gambling problem, there are both local and national resources that can help.
For a list of national problem gambling resources, see the bottom of our homepage here.
State-level gambling resources: