ANALYSIS: Tennessee approvals will boost Wedge Index rating
Tennessee’s Wedge Index score is set to change dramatically as the state readies for sports betting go-live date in November.
BetMGM, DraftKings and FanDuel are the first three names to be given licences ahead of the opening of the Tennessee sports-betting market in November 1, a move which will transform the state Wedge Index gaming accessibility number.
Tennessee currently sits in a lowly 40th position in the Wedge Index with a mere five points for gaming accessibility. However, once the sports betting market opens it will quickly move up the list to at least 9th as online and mobile betting become a feature in the state.
More licensees are set to be announced in November by the Tennessee Education Lottery, the licensing entity in the state, which will also boost the Index number. A locally-based operation called Action 24/7 is also believed to have applied for a licence.
The more brands that are available in the state, the more points are gained. There is unlimited licensing in Tennessee.
Tennessee is the first state to have online-only sports betting as it has no land-based casinos or other gaming establishments. The only other gaming available in the state is the lottery.
Remote registration, 90% payout cap
As such, remote registration – which is one of the most important factors within the Wedge index calculations – is therefore a given.
Sports-betting will begin by the latest November 1 or earlier if the books already announced are ready. The legislation for sports-betting was formally adopted in April.
One quirk of the legislation will not immediately affect the state’s Wedge Index rating though may have long-term implication is that the legislation includes a payout cap of 90%, requiring operators to hold to least 10% of turnover annually. Tennessee is the only state to adopt such a rule.
Sports-betting proponents point out that such a rule would put Tennessee operators at a disadvantage to offshore books which can operate on much slimmer margins and hence offer better odds.
In a recent update, the lottery said it will calculate the annual payout on a calendar year basis and hence any wagers placed before January 1, 2021 will not be included in any calculation.
It is yet to be seen whether the rule will dissuade any operators from entering the market and this impairing the Wedge Index rating.