Observers of the sports betting industry probably didn't foresee Louisiana proposing a significant tax hike on their 2024 bingo cards, but it may happen due to recently introduced legislation.
On Monday, Rep. Roger Wilder III (R-Livingston Parrish) introduced House Bill 22 (HB 22), which, if passed, would increase Louisiana’s sports betting tax from 15% to 51%, more than tripling it.
"There is hereby levied a fifty-one percent tax upon the net gaming 2 proceeds from sports wagering offered to consumers within this state pursuant to this 3 Title electronically through a website or mobile application,” according to text of the bill.
Mobile sports betting launched in Louisiana in early 2022, and since then, this type of wagering has thrived in a state that was already the gambling hub of the Southeast. Presently, the state holds the 15th position in handle since the legalization of sports betting, but that ranking is expected to drop as larger states like Florida and North Carolina provide additional data.
Louisiana Might Be Influenced by New York's Sports Betting Tax
It's uncertain whether Wilder was inspired by New York or Vermont when suggesting HB 22, but those are the only two states that have sports betting taxes set at 51%.
Although mobile sportsbook operators have expressed strong disapproval of New York's tax plan, gaming firms recognize that the Empire State holds power due to its position as the fourth-largest state in the nation. That substantial population is not an advantage that Louisiana possesses.
Wilder's suggested legislation might upset sportsbook operators in a different manner. If enacted, it would revoke an earlier law that permits promotional play, which is a key customer acquisition strategy in the sector.
“Repeals the provision authorizing promotional play and amends the definition of ‘net gaming proceeds,’” according to the bill.
The law does not apply to Louisiana’s parimutuel sector, which encompasses bets placed on horse racing and successful wagers.
Louisiana Tax Plan Might Surprise Sector
Earlier this year, Illinois changed its sports betting tax structure, implementing a graduated tax system where the biggest operators, including DraftKings and FanDuel, are taxed at higher rates compared to their smaller competitors.
That decision led to the two gaming companies facing tax rates effectively double in that state and fueled speculation in the industry that other states might seek to raise sports wagering taxes to enhance revenue.
The common belief was that, if any states were to increase sports betting taxes soon, it would be Michigan or New Jersey — states that do not share political similarities with Louisiana. That might also indicate that the sector, which despises elevated taxes, could be taken by surprise by Wilder’s suggestion.
Currently, it’s uncertain whether there’s support for Wilder’s bill, but it may have one advantage in its favor. Louisiana possesses a favorable sports betting landscape since none of the three neighboring states allow mobile wagering at this time.