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A bill that would more than triple the sports-betting tax rate in Louisiana was deferred on Wednesday (November 13), so work could continue on the proposal that is part of Republican Governor Jeff Landry’s broader tax-reform package.
House Bill 22, authored by Republican state Representative William Wilder III, would bring Louisiana in line with the 51 percent tax rate imposed in New York, Rhode Island and New Hampshire. Louisiana currently has a 15 percent tax on online sports-betting gross revenue.
Analysts estimated a 51 percent tax rate would generate $205.3m in taxes for Louisiana in this fiscal year, an increase from the $52.2m under the current rate that was set by a 2021 state law.
In addition, Wilder’s bill would eliminate promotional credits to players. Currently, promotional play is permitted, and up to $5m in credits can be deducted from operators’ tax calculations.
Louisiana is facing a $700m budget shortfall, and supporters of the tax increase believe it would help the state close its deficit as part of a broader initiative to reform the state's tax code for the first time since the 1970s.
“The tax code is incredibly out-of-date, and this tax code is holding back our state,” Governor Landry said in a speech opening the current special session of the state legislature on November 6. “Making these proposed changes will take courage and strength, but we have something today that our predecessors did not have.”
Giving testimony Wednesday before the House Ways and Means Committee, Wilder stressed that HB 22 was “not a penalty bill” but the current online sports-betting tax of 15 percent needs to be “paired up a little bit better” with the 32.5 percent rate on truck-stop video poker terminal operators in Louisiana.
“The math doesn’t match. The number doesn’t make sense,” Wilder said. “My intent today is to defer this bill … because I believe I have some more learning to do and I’m fine with that. I’m well aware that Louisiana is not New York, Rhode Island or New Hampshire.”
In the case of those three states, only New York has a competitive licensing framework comparable to Louisiana's, but it is by far the largest and most lucrative regulated sports-betting market in the U.S. The sports-betting markets of Rhode Island and New Hampshire, where the state similarly takes 51 percent of the revenue, are limited to a single, monopoly operator.
The bill has been strongly opposed by gaming executives and industry lobbyists.
Wade Duty, executive director of the Louisiana Casino Association, urged lawmakers to be cautious about the revenue assumptions made from more than tripling the tax on sports betting.
Duty explained than raising the rate to 51 percent would represent a 340 percent “increase overnight” and force operators to water down their products.
“You can't expect a business to absorb a 340 percent tax increase and say business as usual,” he added.
Caesars New Orleans general manager Samir Mowad explained that the company invested $400m in the rebranding of its property Harrah’s to Caesars based on the expectation of a 15 percent tax rate for sports wagering.
“If you were given one set of expectations and made one set of investments in technology, people, in a platform at an expected rate of 15 percent and a couple of years later, you’re now looking at having that anywhere from doubled to more than tripled, it makes it a very difficult environment to operate in this business,” Mowad said.
It appears unlikely HB 22 will come up again before the current special session adjourns on November 25, but lawmakers will likely continue their discussion further when the 2025 regular session convenes in Baton Rouge in April.
Prior to the hearing, Jeff Ifrah, co-founder of the iDevelopment and Economic Association (iDEA), released a statement warning that a 51 percent tax rate would “mark 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,” Ifrah said, insisting that such a sharp increase would not only raise costs for operators but ultimately impact consumers.
“If Louisiana seeks to increase revenues, the path forward should be to expand opportunity, not to suffocate a thriving industry that is already generating economic benefits,” Ifrah added.
“Legalizing and regulating online gaming would bring an unregulated activity into the fold of consumer protections and complement Louisiana's established land-based industry, providing a new and substantial revenue stream without additional burdens on businesses or consumers.”
Several states have recently increased their tax rates on sports betting, seeking to increase annual revenues.
In its 2023 budget law, Ohio doubled its tax rate on sports betting from 10 percent to 20 percent of gross revenue. Republican Governor Mike DeWine first proposed the increase barely two months after the launch of legal wagering on January 1, 2023. A bill has since been proposed in the state's Senate to reverse the change.
In July, Illinois Governor J.B. Pritzker, a Democrat, signed a budget law that created a new tiered tax structure for sports betting ranging from 20 percent to 40 percent, up from the initial 15 percent.
Lawmakers in other states have also proposed bills to raise sports-betting tax rates.
New Jersey Senator John McKeon, a Democrat, introduced S 3064 in April with the goal of increasing New Jersey’s online casino tax rate from 15 percent to 30 percent, and online sports betting from 13 percent to 30 percent. The bill was referred to the Senate State Government, Wagering, Tourism, & Historic Preservation Committee where it remained Wednesday.
In May, Massachusetts lawmakers rejected a proposed amendment to the Senate’s fiscal year 2025 budget bill that would have raised the tax rate for online sportsbooks from 20 percent to 51 percent.
