Can the Tennessee legislature legalize sports betting without amending the state constitution?

Subject

Legality of Sports Betting in Tennessee, December 14, 2018

Plain-English summary

After the U.S. Supreme Court struck down the federal Professional and Amateur Sports Protection Act (PASPA) in Murphy v. NCAA, 138 S. Ct. 1461 (2018), states regained the power to legalize sports betting. Senator Brian Kelsey asked whether Tennessee could do that purely by legislation, or whether it needed a constitutional amendment first.

The AG's answer was that it depends on the kind of sports betting. Tennessee's constitution, art. XI, § 5, bans the General Assembly from authorizing "lotteries" (with two narrow exceptions for the state lottery and certain charitable gaming). It does not ban all gambling. Lotteries are a subspecies of gambling defined as games of chance with three elements: consideration, prize, and chance. Whether a particular sports betting contest is a lottery turns on the role of "chance" under the "dominant factor" test, which the Tennessee Supreme Court has effectively adopted (Secretary of State v. St. Augustine Church, 766 S.W.2d 499, 501 (Tenn. 1989)) even without naming it.

Under the dominant factor test:

• If skill is the dominant factor, the contest is not a lottery, and the General Assembly can authorize it by statute.
• If chance is the dominant factor, the contest is a lottery, and authorizing it requires a constitutional amendment.

The AG provided concrete examples. Betting on a single professional baseball game would likely fall outside the lottery prohibition: the outcome turns primarily on the players' skill, and bettors have substantial information (records, statistics, scouting) to inform their bets. The opinion noted that most states with lottery bans have concluded that horse-race betting is not a lottery for similar reasons (the jockey's skill, the horse's condition, and bettor information about past performance).

But chance-dominated contests are different. The Delaware Supreme Court in In re Request of Governor for Advisory Opinion, 12 A.3d 1104, 1113-14 (Del. 2009), held that a multi-game parlay (picking the winners of three to fourteen NFL games) was a lottery because the chance element compounds across multiple games and overwhelms the skill component. The same analysis would likely apply in Tennessee.

The practical implication for the General Assembly: under the opinion, a sports betting law focused on single-event wagers, where bettors have access to records and statistics, falls outside the lottery ban and can be authorized by statute. A multi-game parlay, where chance compounds across games, is the kind of contest the opinion treats as a lottery that would require a constitutional amendment. The opinion did not address prop bets or fantasy sports.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Three pieces of background drive the analysis:

The federal background. PASPA (28 U.S.C. § 3702) had since 1992 prohibited states from authorizing sports betting (with limited grandfather clauses for Nevada and a few others). In Murphy v. NCAA, 138 S. Ct. 1461 (2018), the Supreme Court held PASPA unconstitutional under the anticommandeering doctrine. The whole Act was struck down because the remaining provisions could not be severed. After Murphy, each state decides for itself.

The Tennessee constitutional ceiling. Article XI, § 5 prohibits the General Assembly from authorizing "lotteries" (with two narrow exceptions: the state lottery approved by 2002 amendment, and certain charitable gaming approved by 2014 amendment). The General Assembly remains free to authorize forms of gambling that aren't lotteries (St. Augustine Church, 766 S.W.2d at 500).

The dominant factor test. A "lottery" requires three elements: consideration, prize, and chance (St. Augustine Church, 766 S.W.2d at 501, citing France v. State, 65 Tenn. 478, 483 (1873), and State ex rel. Dist. Attorney Gen. v. Crescent Amusement Co., 95 S.W.2d 310, 312 (Tenn. 1936)). Almost all gambling involves consideration and prize, so the lottery analysis turns on chance. The dominant factor test, applied by the majority of state courts, asks whether chance dominates over skill in determining the outcome. Tennessee has not formally adopted the test by name, but the Supreme Court's reasoning in St. Augustine Church (treating bingo as a lottery because it required less skill than parlor games) tracks it. The AG also cited prior AG opinions applying the same analysis to Texas Hold 'em poker (05-159), video poker machines (94-127), riverboat gambling (92-35), and turkey shoots/fishing tournaments (90-08).

A useful Tennessee-specific signal: Bell v. State, 37 Tenn. 507, 509 (1857), categorized billiards as a skill game, lotteries as chance games, and backgammon as "of a mixed nature." A modern court would likely treat single-event sports betting more like billiards (skill-dominated, informed by knowledge of players and conditions) than like backgammon.

Common questions

Did Murphy v. NCAA simply legalize sports betting in Tennessee?

No. Murphy struck down the federal ban that prohibited states from authorizing sports betting. After Murphy, Tennessee can decide for itself whether to authorize sports betting. The decision is for the General Assembly, subject to the state constitution's lottery ban.

Why does it matter whether sports betting is a "lottery"?

Because the Tennessee Constitution, art. XI, § 5, prohibits the General Assembly from authorizing lotteries. If sports betting is a lottery, the General Assembly cannot authorize it by statute alone; a constitutional amendment is required. If sports betting is not a lottery, the General Assembly can authorize it like any other state law.

What's the dominant factor test?

It's the test most state courts use to determine whether chance or skill predominates in a contest. If chance dominates, the contest is a lottery. If skill dominates, the contest is something else (often legal gambling, depending on state law). Tennessee courts have used the same reasoning even without expressly naming the test.

Why is single-event sports betting (like an NFL game) likely OK?

Because skill dominates the outcome of the underlying sport. The players' training, the coaches' strategy, and the teams' conditioning largely determine who wins. Bettors have access to extensive statistical, scouting, and historical information they can use to inform bets. Bad luck and randomness exist in any sporting event, but they don't dominate. The AG drew an analogy to horse-race betting, which most state courts treat as not a lottery for the same reasons.

Why are parlays or multi-game prop bets different?

Because the chance element compounds. Even if any single game is skill-dominated, the probability that a bettor correctly picks all of three (or five or ten) games involves multiplying chance by chance. The Delaware Supreme Court in In re Request of Governor reached exactly this conclusion for NFL parlays: the multi-game format pushes chance from a minor factor to the dominant one, making the contest a lottery.

What about fantasy sports?

The opinion expressly carved fantasy sports out of its analysis. Footnote 1 states that it "does not address other forms of sports betting, such as fantasy sports betting" or betting on devices that simulate a sporting event. So this opinion does not tell you how the lottery ban applies to fantasy contests.

So can the General Assembly just pass a sports betting bill tomorrow?

Per this opinion, it can authorize skill-dominated formats by statute, but the format matters. A bill authorizing single-event wagering, with the bettor-information access the opinion discussed in the horse-race cases, fits the "skill dominates" side of the test. A bill authorizing multi-game parlays runs into the opinion's conclusion that compounding chance makes such contests lotteries, which the legislature could not authorize without a constitutional amendment.

Does this opinion bind the courts?

No. AG opinions are persuasive authority. The dominant-factor framework here closely tracks Tennessee Supreme Court case law and the consensus across most other states, but the application to particular sports-betting formats is fact-specific and a court might reach a different conclusion in a particular case.

Citations

Constitutional provisions

• Tenn. Const. art. XI, § 5 (prohibition on lotteries; limited exceptions)
• 28 U.S.C. § 3702 (PASPA, struck down by Murphy)

Cases

• Murphy v. National Collegiate Athletic Ass'n, 138 S. Ct. 1461 (2018)
• Perry v. Lawrence Cnty. Election Comm'n, 219 Tenn. 548, 411 S.W.2d 538 (1967)
• Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449 (1962)
• Secretary of State v. St. Augustine Church, 766 S.W.2d 499 (Tenn. 1989)
• France v. State, 65 Tenn. 478 (1873)
• State v. Smith, 10 Tenn. 272 (1829)
• State ex rel. Dist. Attorney Gen. v. Crescent Amusement Co., 170 Tenn. 351, 95 S.W.2d 310 (1936)
• Bell v. State, 37 Tenn. 507 (1857)
• State v. Netto, 486 S.W.2d 725 (Tenn. 1972)
• In re Request of Governor for Advisory Opinion, 12 A.3d 1104 (Del. 2009)

Prior AG opinions

• Tenn. Att'y Gen. Op. 05-159 (Oct. 14, 2005) (Texas Hold 'em)
• Tenn. Att'y Gen. Op. 99-084 (Apr. 5, 1999) (tagged-fish contests)
• Tenn. Att'y Gen. Op. 94-127 (Nov. 1, 1994) (video poker machines)
• Tenn. Att'y Gen. Op. 92-35 (Apr. 22, 1992) (riverboat gambling)
• Tenn. Att'y Gen. Op. 90-08 (Jan. 22, 1990) (turkey shoots and fishing tournaments)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2018/op18-48.pdf

Original opinion text

Legality of Sports Betting in Tennessee

Question

Does the General Assembly have the authority to legalize sports betting in the State of Tennessee solely through legislative action without a constitutional amendment?

Opinion

Article XI, section 5 of the Tennessee Constitution prohibits the General Assembly from authorizing any form of sports betting that constitutes a lottery. Whether a particular sports betting contest comes within the 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.

ANALYSIS

This Opinion addresses the authority of the General Assembly to legalize sports betting in this State. Earlier this year, the United States Supreme Court removed a major impediment to legalized sports betting when it struck down the Professional and Amateur Sports Protection Act (PASPA). See Murphy v. National Collegiate Athletic Ass'n, 138 S. Ct. 1461 (2018). At issue in Murphy was PASPA's "most important" provision that generally made it "unlawful" for a State or any of its subdivisions to authorize or license sports gambling. Murphy, 138 S. Ct. at 1470 (citing 28 U.S.C. § 3702(1)). The Court determined that this provision was unconstitutional because it violated the anticommandeering doctrine. Id. at 1478. Following this determination, the Court struck down the entire Act because PASPA's remaining provisions could not be severed. Id. at 1482-1484.

Accordingly, Murphy has paved the way for each State to decide for itself whether to legalize sports betting. Thus, the General Assembly may pass legislation authorizing sports betting in this State as long as such legislation does not run afoul of the Tennessee Constitution. See Perry v. Lawrence Cnty. Election Comm'n, 219 Tenn. 548, 551, 411 S.W.2d 538, 539 (1967) (citing Frazer v. Carr, 210 Tenn. 565, 585, 360 S.W.2d 449, 457 (1962)).

[1] For purposes of this Opinion, we assume that sports betting involves only the betting on actual sporting events. This Opinion does not address other forms of sports betting, such as fantasy sports betting or betting that involves amusement devices designed to simulate the playing of some sporting event.

Article XI, section 5 of the Tennessee Constitution generally provides that the General Assembly shall have no power to authorize "lotteries" for any purpose. While this constitutional provision clearly prohibits lotteries, it does not prohibit all forms of gambling. Secretary of State v. St. Augustine Church, 766 S.W.2d 499, 500 (Tenn. 1989). Lotteries are only a species of gambling. See France v. State, 65 Tenn. 478, 481 (1873); State v. Smith, 10 Tenn. 272, 283 (1829); 38 Am.Jur.2d Gambling § 6 (2018). Therefore, the General Assembly may legalize and regulate any form of gambling that does not constitute a lottery. St. Augustine Church, 766 S.W.2d at 500.

The term "lottery," as used in article XI, section 5, refers to "a game of hazard in which small sums are ventured for the chance of obtaining a larger value either in money or other articles." Id. at 501 (quoting France, 65 Tenn. at 483). Thus, "in order that a transaction may be a lottery, three elements must be present: consideration, prize and chance." Id. (quoting State ex rel. Dist. Attorney Gen. v. Crescent Amusement Co., 170 Tenn. 351, 357, 95 S.W.2d 310, 312 (1936)).

Almost every form of gambling involves the first two elements of consideration and prize because a bet is risked in the hopes of obtaining a larger reward. Thus, whether a gambling contest constitutes a lottery will generally turn on the role that the third element of "chance" plays in the outcome.

To determine whether the element of "chance" is present, most courts apply the "dominant factor" test, under which a scheme is deemed a lottery when chance dominates the distribution of prizes even though the exercise of some degree of skill, judgment, or research is present. While no Tennessee court has expressly adopted the dominant factor test, the Tennessee Supreme Court has embraced the reasoning of this test because it does consider the amount of skill that a contest requires when determining whether the contest constitutes a lottery. See, e.g., St. Augustine Church, 766 S.W.2d at 501 (Court found bingo to "clearly constitute[] a lottery," noting that bingo "demands less skill on the part of the player" than "dominoes, parcheesi, or any number of other perfectly innocent parlor games . . . and turns almost wholly on the random drawing of numbers"); Smith, 10 Tenn. at 281-282 (Court described many types of card games as lotteries because "cards are but numbered pieces of paper, and chances in getting certain numbers determine success"); Bell v. State, 37 Tenn. 507, 509 (1857) (Court observed that billiards is a game that depends on skill, lotteries are games that depend on chance, and backgammon is "of a mixed nature" of skill and chance).

Accordingly, this Office has applied the dominant factor test to various proposed contests to determine if the contests constituted lotteries. See Tenn. Att'y Gen. Op. 05-159 (Oct. 14, 2005) ("Texas Hold 'em" poker tournaments); Tenn. Att'y Gen. Op. 94-127 (Nov. 1, 1994) (video poker machines); Tenn. Att'y Gen. Op. 92-35 (Apr. 22, 1992) ("Riverboat Gambling"); Tenn. Att'y Gen. Op. 90-08 (Jan. 22, 1990) (turkey shoots and fishing tournaments). As these Opinions observe, the question of whether chance or skill predominates in a particular contest turns upon the specific facts of the contest. See id. In other words, it is the character of the contest, i.e., how the contest is conducted, and not the skill or want of skill of an individual participant that determines whether the game is one of chance or skill. See id.; 38 C.J.S. Gaming § 2 (2018). Cf. State v. Netto, 486 S.W.2d 725, 729 (Tenn. 1972) (court is to inquire into the game; whether a game is a lottery is not determined by the game's name). Thus, we have opined, for instance, that a fishing contest that awards prizes to contestants who catch specific tagged fish would be a game of chance. While the contest "arguably involv[es] an element of skill," ultimately "whether one of the tagged fish happens to take or hit the entrant's bait or lure, as opposed to any other fish in the lake, is not within the control of the entrant. It is a chance event", and hence an impermissible lottery. Tenn. Att'y Gen. Op. 99-084 (Apr. 5, 1999); Tenn. Att'y Gen. Op. 90-08 n. 1 (Jan. 22, 1990) (same).

Application of the dominant factor test to sports betting works in the same manner. If a contest is based more on skill than it is on chance, the contest would not be a lottery. Thus, a contest that involves entrants placing bets on the outcome of an individual professional baseball game, for example, would appear to fall outside the parameters of Tennessee's lottery prohibition. Most States with a constitutional or statutory prohibition against lotteries that have considered whether betting on horse races constitutes a lottery have determined that they do not. Courts have generally reasoned that chance does not control the outcome of horse races because the skill of the jockey and the condition, speed, and endurance of the jockey's horse are all factors that affect the result of the race. Moreover, bettors on horse races have sources of information that they may review before placing their bets. This information includes not only data on the actual race, but also previous records on the past performance of the jockeys and the horses. These sources allow the bettor to exercise his judgment and discretion in determining the horse on which to bet. Thus, courts generally reason that chance does not predominate. In a like manner, the winner of a professional baseball game is primarily determined on the participants' skill. And persons who bet on such a game have a multitude of available sources of information to aid them in placing informed bets.

Conversely, a sports betting contest that is predominately chance-based would constitute a lottery. For instance, the Delaware Supreme Court examined three games that required players to select the winners of multiple professional football games. Because "the element of chance that enter[ed] each game [was] multiplied by a minimum of three and a maximum of fourteen games," the Court determined that the games constituted lotteries because chance was the predominant factor of the games. In re Request of Governor for Advisory Opinion, 12 A.3d 1104, 1113-1114 (Del. 2009) (citation omitted).

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.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

LAURA T. KIDWELL
Senior Assistant Attorney General

Requested by:
The Honorable Brian Kelsey
State Senator
716 Cordell Hull Building
Nashville, Tennessee 37243