Tennessee Legislators Punt Online Sports Betting Bill, Cite Wire Act Questions

Posted on: March 26, 2019, 05:01h. 

Last updated on: March 26, 2019, 05:44h.

A bill that would make Tennessee the only state in the country to offer sports betting exclusively on a digital basis failed to advance out of a committee Tuesday as lawmakers raised questions about the legislation.

Tennessee state Rep. Rick Staples (D-Knoxville) is the sponsor of a bill that would legalize sports betting in Tennessee and make it the only state in America where it was only available online. The House State Committee voted to delay a decision on the bill Tuesday. (Image: Caitie McMekin/Knoxville News Sentinel)

The House State Committee voted 13-6 to move House Bill 1 to the back of its calendar.

Which means, of the 23 bills currently under consideration, the committee placed the sports betting bill last. However, there remains a chance it could be brought back for more discussion and a vote on April 2.

Tuesday’s nearly 90-minute discussion featured a divided committee and questions about the bill’s legality, profitability, and morality. Even the decision to push the bill drew the ire of some critics, who felt it was just a stalling tactic.

The bill proposes that the Tennessee Lottery oversee sports betting. It calls for awarding 10 licenses, with each license costing $750,000. The state would tax the sportsbooks adjusted gross income at 10 percent, with 85 percent of revenues going to the lottery’s education fund.

The remaining monies would go to Tennessee municipalities.

Wire Act, Addiction Concerns Offered

The committee heard from two witnesses who opposed expanded gaming or expressed strong reservations about HB 1.

Charles Armistead called online and mobile sports betting “the electronic crack cocaine of gambling,” due to what he claimed is its addictive nature. He noted the state went from having zero rehabilitation centers to 22 in the 16 years since the state lottery began.

If sports gambling uses these devices,” Armistead said, while holding a smartphone, “we’ll have even more need for rehab centers.”

The comparison to narcotics made state Rep. Rick Staples (D-Knoxville) — the bill’s sponsor — bristle, however.

“I think that individuals on this committee know me well enough that I would never do anything to be as low as to bring something equated to crack cocaine before them,’ he said.

Stuart Scott, a Nashville lawyer with Dickinson Wright, said his firm handles sports betting issues in Nevada and elsewhere. He told the committee that the U.S. Justice Department’s recent interpretation of the Wire Act gives him pause about passing any mobile betting legislation.

He said if passed, the bill sets up the state as a possible test case for the Supreme Court.

“There will be access to potential out-of-state transmissions by intrastate gaming,” Scott told lawmakers. He indicated that geotechnology still has enough flaws to allow for the potential for out-of-state wagers to slip through.

Amendment Adds Protection for Colleges

The committee approved an amendment that would allow colleges and universities in the state to petition an advisory board to prohibit certain types of bets on their athletic teams.

However, three other amendments died. That included an attempt to allow for retail sportsbooks in the state’s four largest cities. An attempt to reduce the license fee to $75,000 while expanding the number of licenses also failed. Those two amendments were part of the original bill.

So, too, did an attempt to block betting on Christmas, Thanksgiving, Easter, and Sundays fail. That would’ve fallen in line with state laws on alcohol sales.

Sundays are a time for tithes and offerings,” said state Rep. Jason Powell (D-Nashville). “It doesn’t need to be a time for wagers and lines or bets when people are sitting in church.”

Even with the amendment giving schools a chance to block their games, state Rep. Johnny Shaw (D-Bolivar) said it could still lead to student-athletes being tempted.

“This is a house with too many holes in it,” he said.

Staples, who approved delaying the vote, told his colleagues that a team of individuals, including lottery officials, have worked on perfecting the bill for nearly a year.

That includes language for the sportsbooks to establish their servers in Tennessee to avoid potential Wire Act issues, he said.

“We have some wise individuals that have really worked on these protections,” he said.