In Tennessee, the options for gambling are limited. Until recently, the only legal forms of gambling were the state lottery and charitable gambling in the form of bingo and raffles. However, in 2016, local lawmakers authorized paid DFS contests, which provide a new outlet for gaming enthusiasts.
Despite these limited options, Tennessee doesn’t have any brick-and-mortar casinos. In fact, the last serious attempt to legalize this form of gambling took place in February 2017, when Rep. Larry Miller proposed a bill, but it was swiftly shut down by a House committee less than a month later.
While horse race betting was permitted by local regulations for almost thirty years, individual counties opposing the idea prevented potential investors from building a racetrack. The relevant law was eventually repealed in 2015, ending the discussion on this particular form of gambling.
You might think that playing on social gaming sites like Zynga or Slotomania is a harmless way to pass the time, but you could be taking a risk if you participate in any promos or giveaways. That’s because according to current regulations, accepting any prizes could leave you open to prosecution.
Tennessee Gambling Revenues
Despite a lack of casinos within state borders, Tennesseans still contribute significantly to the gambling industry. In 2021, the Tennessee Education Lottery reported $2.07 billion in total sales, a record high for the state. The majority of these revenues are allocated to education programs, including college scholarships and K-12 initiatives. Since the lottery’s inception in 2004, it has generated over $6.7 billion for education, helping to fund important programs throughout the state.
Another form of gambling that has recently become legal in Tennessee is sports betting. In November 2020, sports betting was launched in the state through online platforms. In the first six months of operation, the industry generated over $580 million in total handle and over $50 million in gross gaming revenue. The state collects a 20% tax on sports betting revenue, which is allocated to a combination of local governments, education, and problem gambling services.
Additionally, Tennessee allows certain forms of charitable gambling, including bingo and raffles, which can be operated by non-profit organizations. These activities generated over $18 million in revenue in 2020, according to the Tennessee Secretary of State’s office. The majority of these revenues are distributed to the organizations that operate the events, with a smaller percentage going to the state.
Indian Gaming Tribes in Tennessee
While there are no federally recognized Indian tribes in Tennessee, there are several groups that have sought recognition and the right to operate gaming facilities. One such group is the United Eastern Lenape Nation of Winfield, which was recognized by the state in 1995. The tribe has attempted to open a casino in Scott County, but has faced opposition from local officials and residents.
Another group that has sought recognition in Tennessee is the Cherokee Wolf Clan, which claims descent from the historic Cherokee Nation. The group has not been recognized by the state or federal government, but has expressed interest in pursuing gaming opportunities if they were to receive recognition.
In addition, the Eastern Band of Cherokee Indians operates Harrah’s Cherokee Casino Resort and Harrah’s Cherokee Valley River Casino & Hotel in North Carolina, which are popular destinations for Tennessee residents. The casinos are located just over the border from Tennessee and are estimated to generate over $700 million in annual revenue.
In summary, while there are no federally recognized Indian tribes in Tennessee, there are groups that have sought recognition and the right to operate gaming facilities. These efforts have been met with opposition from local officials and residents, and the state has not yet authorized any Indian gaming. However, the Eastern Band of Cherokee Indians operates two popular casinos just across the border in North Carolina that are accessible to Tennessee residents.
List of Indian Gaming Tribes in Tennessee:
- United Eastern Lenape Nation of Winfield
- Cherokee Wolf Clan (unrecognized)
- None federally recognized
A History of Gambling in Tennessee
Gambling has a long and complicated history in Tennessee, with various forms of wagering being popular throughout different eras. In the 1800s, gambling was common in saloons and on riverboats, and the state’s first horse racing track was established in Nashville in 1804. By the late 1800s, however, the state had begun to crack down on gambling and passed laws banning most forms of wagering.
Despite these laws, gambling continued to be a popular pastime throughout the 20th century. During the 1920s, underground gambling rings operated in cities like Memphis, Chattanooga, and Knoxville, and illegal casinos and betting parlors continued to operate in some areas. In 1937, the state legislature passed the “Crump Law,” named after Memphis Mayor Edward Hull Crump, which strengthened anti-gambling statutes and made it a felony to operate a gambling business.
In the 1970s, the state lottery began to gain popularity as a way to fund education programs, but it wasn’t until 2002 that the state authorized the creation of the Tennessee Education Lottery. Today, the lottery is the only form of gambling explicitly allowed in the state, and it generates billions of dollars in revenue for education programs every year.
Recently, Tennessee has also legalized sports betting, with online platforms launching in 2020. The industry has been a huge success in its first year of operation, generating over $580 million in total handle and $50 million in gross gaming revenue. The state collects a 20% tax on sports betting revenue, which is used to fund education, local governments, and problem gambling services.
While Tennessee has not authorized any casinos or other forms of gambling, many residents travel to neighboring states to gamble. Mississippi, for example, has several casinos near the Tennessee border, and the state estimates that Tennesseans account for around 10% of the total revenue generated by these facilities.
Gambling Taxes in Tennessee
If you engage in any form of gambling in Tennessee, you may be required to pay taxes on your winnings. The state’s tax laws on gambling vary depending on the type of activity you are engaging in, but in general, you are required to report all gambling winnings as taxable income on your state income tax return.
For example, if you win a prize in the state lottery, the Tennessee Education Lottery Corporation will automatically withhold 24% of your winnings for federal taxes, and 5% for state taxes. If your winnings exceed $5,000, the state tax rate increases to 6%. It is important to note that if you win a prize worth more than $600, the lottery corporation will issue a W-2G form that shows the amount of your winnings and the taxes that were withheld.
Similarly, if you engage in sports betting in Tennessee, you are required to report all winnings as taxable income. The state collects a 20% tax on gross gaming revenue from sports betting, which is used to fund education, local governments, and problem gambling services. This tax is collected by the state and does not need to be paid directly by individual bettors.
In addition, if you engage in certain types of charitable gambling, such as bingo or raffles, you may be required to report any winnings as taxable income. However, the organization that operates the event is responsible for withholding taxes and reporting winnings to the state.
If you are uncertain about how to report gambling winnings on your state income tax return, you should consult with a tax professional. Failing to report gambling winnings as taxable income can result in penalties and interest charges. Additionally, if the state discovers that you failed to report gambling income, you may be subject to an audit.
Tennessee Gambling FAQ
How much can you win at Tennessee casinos before being taxed?
As there are no casinos in Tennessee, this question is not applicable. However, if you win a prize in the state lottery or engage in sports betting in Tennessee, you may be required to pay taxes on your winnings. Please refer to the “Gambling Taxes in Tennessee” section for more information.
How to ban yourself from casinos in Tennessee?
As there are no casinos in Tennessee, there is no formal self-exclusion program in place. However, if you are concerned about problem gambling, you can seek help from the Tennessee Council on Problem Gambling or other organizations that provide support and resources for individuals struggling with gambling addiction.
Who regulates gambling in Tennessee?
The Tennessee Education Lottery Corporation is responsible for regulating the state lottery and sports betting in Tennessee. The organization oversees the licensing of sports betting operators and ensures that all activities are conducted in accordance with state law. Charitable gambling activities, such as bingo and raffles, are regulated by the Tennessee Secretary of State’s Division of Charitable Solicitations and Gaming.
What is the minimum gambling age in Tennessee?
The minimum gambling age in Tennessee is 18 for the state lottery and charitable gambling activities. To engage in sports betting, however, you must be at least 21 years old.
Can I gamble online in Tennessee?
Yes, Tennessee legalized online sports betting in 2020, and several online sportsbooks are currently operating in the state. However, all other forms of online gambling, including online casinos and poker rooms, are prohibited in Tennessee.
What types of gambling are legal in Tennessee?
The only forms of gambling explicitly allowed in Tennessee are the state lottery and sports betting. Certain types of charitable gambling, such as bingo and raffles, are also legal. All other forms of gambling, including casinos, poker rooms, and horse racing, are prohibited in the state.
Can I deduct gambling losses on my taxes in Tennessee?
Yes, you may be able to deduct gambling losses on your state income tax return in Tennessee. However, this deduction is only available if you itemize your deductions and only up to the amount of your gambling winnings. It is important to keep accurate records of all gambling activity in order to support any deductions you claim on your tax return.