Louisiana Bill Would Bring Massive Tax Hike for Sports Betting Operators

Sportsbooks may soon see their profits cut in the Bayou State.

A new bill proposed by Representative Roger Wilder III would raise Louisiana’s sports betting operator tax from 15% to 51%. The bill has been referred to the House’s Ways and Means Committee, which will review it before passing it. If passed, the bill would make the state the most expensive for operators, matching Vermont and New York. 

New York was the first state to set its tax rate at 51%, but others are now attempting to follow suit. That includes Louisiana, a middling market with one of the lower tax rates in the country. If they are successful, similar bills would likely be spurred in smaller markets.

In addition to raising the tax rate, the bill would also eliminate promotional plays offered by sportsbooks. Sportsbooks are a top tool for operators to recruit new users, meaning opposition to them will be fierce.

Bill Faces Tough Challenges Ahead

More money for the state will garner strong support from legislatures, but it will be an uphill battle to get this bill passed.

While raising tax rates is common, this much of a jump is almost unheard of. If passed, it would severely affect sportsbooks, many of which have influence over state legislation. Eliminating promotional play will also fuel the opposition, which will form quickly.

The messaging against this bill will focus on the quality of the state’s sports betting market. Operators will threaten to water down the odds and offer fewer bonuses to offset the losses from an increased tax rate. With promotional play also eliminated, many bettors may stop wagering or look for offshore options.

Illinois was one of the most recent states to attempt to raise its tax rate to 51%. After a fierce battle with sports betting operators, they decided on a tiered tax system instead. Given Louisiana’s market size and current rate, it is possible they could find a similar compromise.