Louisiana is a signature away from becoming the latest state to charge online sportsbooks more tax.
In a session on Sunday afternoon, the state’s Senate passed Rep. Neil Riser’s HB 639 by a 35-3 vote, approving an increase in the sports wagering tax rate from 15% to 21.5%. The bill now heads to heads to Gov. Jeff Landry’s desk.
Riser’s bill passed the House on May 20 and was not amended in the opposite chamber.
Introducing the bill to the Senate floor on Sunday, Sen. Stewart Cathey noted that the bill brings the online sports betting tax rate up to the same level as is levied on brick-and-mortar casinos for casino gaming. Retail sportsbooks’ tax rate of 10% will be unchanged.
“It was worked out with the industry in agreement,” Cathey added. “There is no opposition.”
Online sportsbooks could have found themselves much worse off after this new legislation; the initial version of the bill called for the new tax rate to be a much higher 32%, but that was scaled back on the House floor before the bill was passed there.
Revenue won’t pay college athletes
Cathey faced questions from a fellow senator on the bill. Sen. Greg Miller queried where the extra money would go. Cathey clarified that it will go toward established dedicated funds and offsetting costs.
In addition, 25% of revenues will make up a new fund for D-1 universities, the Supporting Programs, Opportunities, Resources and Teams Fund (SPORT Fund). That money will go toward things such as scholarships, insurance and medical coverage and facility renovations and upgrades.
What it will not go toward is paying college athletes. Last week, a federal judge signed an order decreeing that U.S. colleges and universities can begin to pay athletes beginning July 1, in addition to the use of names, images and likenesses (NIL) since 2021.
“It is specifically in the legislation that it cannot be used to fund NIL or to make direct payments to athletes,” Cathey said. “Absolutely not, I’m fundamentally opposed to that and would not have put my name on anything that allowed that.”
Louisiana third state this year to hike OSB tax
If Landry signs the bill into law, Louisiana will be the third U.S. state this year to approve a higher online sports betting tax rate.
The Maryland budget signed by Gov. Wes Moore last month included a 5% increase in the sports betting tax, taking the state’s rate from 15% to 20%. As with Louisiana’s bill, the initial proposal was for a significantly higher increase before it was pared down by lawmakers.
Then, on May 31, Illinois followed last year’s implementation of a progressive tax rate with a ceiling of 40% by taking the unprecedented step of adding a new 25-cent flat tax on wagers. Operators who take more than 20 million wagers would pay 50 cents per bet for any bets beyond that threshold.
Other states have been mulling changes.
In Ohio, which doubled its tax on sports betting from 10% to 20% in 2023, Gov. Mike DeWine‘s latest proposed increase was shot down, but Sen. Louis Blessing wants to add a 2% tax on handle on top of the revenue tax.
And in New Jersey, Gov. Phil Murphy‘s budget aimed to lift the state’s tax rate on sports betting and iGaming to 25%, from 13% and 15%, respectively.
