Do sports betting sites in the Pelican State deserve a tax break?
While Illinois is pondering a tax hike tied to legal sports betting, Ohio has already enacted one, and Colorado and Virginia have toughened rules for deductions to taxable revenue, lawmakers in Louisiana could be considering some relief for bookmakers.
House Bill 473 was pre-filed by Republican Rep. John "Big John" Illg Jr. and Democratic Rep. Steven Jackson on Thursday, ahead of the regularly scheduled legislative session that starts on Monday, March 11, in Baton Rouge.
If approved by the legislature, H.B. 473 would increase the amount of free bets and other promotional play that Louisiana's online sportsbook operators can deduct from their taxable revenue to $10 million a year from the current level of $5 million. That could lower their overall tax bill.
Rationale TBD
It’s not yet clear why the two lawmakers think Louisiana’s online sportsbooks need a bit more relief. Louisiana has a 10% tax rate for retail sports betting revenue and a 15% levy on online receipts, which is relatively normal. State lawmakers even considered lowering the limit on promotional deductions in 2022 before deciding against such a move.
However, next-door neighbor Mississippi appears to be getting more serious about legalizing statewide mobile sports wagering, which could crimp business in Louisiana. It’s also worth noting that the number of online sports betting operators in Louisiana is well short of the limit; as many as 41 brands are allowed in the state, yet only nine are live.
Moreover, Louisiana's commercial gaming revenue growth was relatively mediocre last year, with the state's casinos and sportsbooks generating about $2.7 billion in income in 2023, up 3.8% from the previous year, according to the American Gaming Association. The national average was 10%.
Plenty of time
H.B. 473 was provisionally referred to the House of Representatives’ Committee for the Administration of Criminal Justice. Whether it goes any further remains to be seen. Louisiana lawmakers will have until June 3 to pass their bills during the regular session, including any legislation that has to do with sports betting.
There has been more than $1.7 billion in mobile sports betting in Louisiana since last July, according to the state's figures. Operators deducted $28.3 million in promotions from July to the end of January, leading to $211.1 million in net proceeds and $29.3 million in tax for the state.
All of those figures are up compared to the same period a year earlier, when mobile handle was just north of $1.3 billion, promotional deductions $9.4 million, net proceeds $105.6 million, and taxes $21.9 million.
The promotional deductions can create some lumpy reporting, as operators tend to take those deductions near the start of the year.
In January of this year, for instance, online sportsbook operators deducted almost $13.8 million in promotions from their revenue, while in December, they deducted only $681,309. As a result, taxes to the state from mobile wagering were $5.3 million in January and $7.2 million in December.
