Louisiana House Rep Proposes Massive Sports Betting Tax Increase

• 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 sits on. The committee will hold a hearing on the bill on Wednesday, Nov. 13, at 9 a.m. local time.

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.

Sports Betting Industry Speaking Out on Tax Increases

Jeff Ifrah, co-founder of iDevelopment and Economic Association (iDEA), a 501(c)6 association seeking to grow jobs and expand online interactive entertainment business in the U.S., released a prepared statement urging Louisiana lawmakers to not consider the tax increase.

Louisiana lawmakers should consider pursuing policies to stimulate economic opportunity and growth, such as iGaming legalization, to increase revenues in the state.

“The introduction of HB22, proposing a staggering tax increase on Louisiana’s sports betting industry, marks a drastic and counterproductive shift in policy. This measure, if passed, will make Louisiana one of the highest-taxed sports betting markets in the country, significantly undermining the competitiveness of legal operators in the state. Such a sharp increase would not only raise costs for operators but ultimately impact consumers, who will bear the brunt through less favorable odds and reduced promotional opportunities,” he said.