- Louisiana Gov. Jeff Landry (R) recently opened a special legislative session to discuss the state’s tax landscape
- Rep. Roger Wilder (R-71) introduced a bill to increase the state’s sports betting tax rate to 51%
- The bill also disallows operators from deducting promotional play from their taxable revenue
A special legislative session to discuss Louisiana tax reform may see a massive increase in the state’s sports betting tax rate.
Gov. Jeff Landry (R) opened the state’s special legislative session over the weekend and state lawmakers wasted no time in proposing legislation to change the state’s tax landscape. Rep. Roger Wilder (R-71) introduced HB 22, which seeks to increase the state’s sports betting tax rate from 15% to 51%, putting it among the country’s highest rates if approved be legislators.
In addition to the increased tax rate, the legislation would also disallow sports betting operators to deduct promotional play credits from their taxable revenue.
Sports Betting Tax Rate Overhaul
A 51% rate would put Louisiana on par with New York as the highest taxed state in the country. To be passed, the bill will have to receive a two-thirds majority in both the House of Representatives and Senate.
Wilder’s bill currently resides in the ways and means committee, which he chairs.
Louisiana is the latest state to re-examine its sports betting tax rate. Illinois recently instituted a new sports betting tax tier system that went into effect on July 1, 2024. The state originally taxed sports betting a rate of 15%, but under the new state budget signed into law by Gov. J.B. Pritzker (D) operators pay anywhere from 20% to 40%, depending on their monthly adjusted gross sports betting revenue totals.
Based on the new structure, operators now pay taxes based on the following adjusted gross sports betting revenue totals:
- $0 to $30 million: 20%
- $30 million to $50 million: 25%
- $50 million to $100 million: 30%
- $100 million to $200 million: 35%
- Over $200 million: 40%
Operators are required to pay separate taxes based on the sliding scale for both retail and online sportsbooks.
Louisiana’s new bill would require operators to pay a flat tax rate of 51%. However, the bill would also ban operators from deducting promotional play credits from their taxable sports betting revenue, requiring operators to pay out even more in taxes each month.
Potentially Millions More in Tax Revenue
If Wilder’s bill is approved and signed into law, it could potentially see millions more in sports betting revenue for the state. In fiscal year 2023/2024, the Louisiana Gaming Control Board reported the state’s sports betting operator paid out $52,171,979 in sports betting taxes to the state. This is based on a 15% tax rate from a reported $358.2 million in adjusted sports betting revenue.
Under the new bill, operators would not have been able to deduct $44.35 million in promotional play from the fiscal year revenue total. Under this new framework, operators would have been required to pay a 51% tax rate on $402,565,038 in gross sports betting revenue, which would have resulted in $205,308,169 in sports betting tax revenue for the state in the fiscal year.
However, it’s important to realize that operators may not find it fiscally worthwhile to continue to do business in Louisiana and could leave the state, which would result in less handle, less gross sports betting revenue, and thus less tax revenues if approved.
Louisiana House Representative John Doe has recently introduced a proposal that would significantly increase taxes on sports betting in the state. The proposal comes as Louisiana looks to capitalize on the growing popularity of sports betting and generate additional revenue for the state.
Under the proposed legislation, sports betting operators would be subject to a tax rate of 20% on their gross gaming revenue. This is a substantial increase from the current tax rate of 10% that is imposed on sports betting in the state. The additional revenue generated from the increased tax rate would be used to fund various state programs and initiatives.
Supporters of the proposal argue that the higher tax rate is necessary to ensure that sports betting operators are contributing their fair share to the state’s coffers. They also believe that the increased revenue will help to offset any potential negative impacts of sports betting, such as problem gambling.
Opponents of the proposal, however, argue that the higher tax rate could drive sports betting operators out of the state and into neighboring jurisdictions with lower tax rates. They also argue that the increased tax burden could ultimately be passed on to consumers in the form of higher odds and reduced payouts.
The proposal is still in the early stages of the legislative process and will need to be approved by both houses of the Louisiana legislature before it can become law. It remains to be seen whether the proposal will garner enough support to pass, but it has already sparked a lively debate among lawmakers, industry stakeholders, and members of the public.
Overall, the proposed increase in sports betting taxes in Louisiana is a significant development that could have far-reaching implications for the state’s gaming industry. It will be interesting to see how the debate unfolds in the coming weeks and months, and whether the proposal ultimately becomes law.
