Legal sports wagering continued its march through the Bayou Tuesday with little fanfare and a “favorable” report. The House Committee on Administration of Criminal Justice sent two Senate bills to the House floor for consideration. There was no discussion and no amendments were offered on either bill, both of which would send the decision to legalize to voters.
Neither bill allows for statewide mobile sports betting, and there is no tax structure in either bill. Given the hurdles left to clear, even if the referendum passes the House and voters approve it, it will likely be more than a year before the first sports bet is taken, as the tax rate and other framework must be sorted out.
No tax rate set, and no statewide mobile
Louisiana lawmakers seem focused on legalizing sports betting this year, after letting it get mired in amendments and pork at the end of the 2019 session. But like every other state right now, the desire for a new revenue stream is enticing, and lawmakers have just a few more weeks to add sports betting dollars to state coffers. The state legislature is set to adjourn on June 10.
Though there is no tax rate in either bill, last year the bill that Sen. Danny Martiny was pushing forward had a tax rate of 13% or less — it ballooned to 13% when a House committee increased the rate to funnel some dollars to horsemen’s groups. But that bill, which got weighed down with video poker and an official league data requirement, never made it to the House floor.
Even if the state legislature approves the referendum, it stands to run into the same roadblock that daily fantasy has. Voters legalized DFS in 47 of 64 parishes in 2018, but it’s still not available in the state because a two-thirds majority in the legislature is required for passage of any new taxes and that bar has proved too high to clear.
Tax on promotional play a relevant issue
In addition, state lawmakers earlier this month opened discussion about the elimination of a tax on casino promotional offerings, which are currently taxed at 23%. Promotions usually allow a patron to play with house money, and in most states, the promotional value of the bet is not taxed. Though a Senate committee stripped the promotional tax from SB 332, the Senate Finance Committee late last week refused to remove the tax on free play.
Lawmakers on one side of the issue argued that removing the tax would help casinos draw more customers and allow the casinos — and ultimately sportsbooks — to offer more free play options, which would translate into higher tax revenue. But the Senate Finance Committee rejected the idea, saying that the state is suffering due to the COVID-19 crisis and removing tax dollars doesn’t seem like a prescient move.
Casinos in Louisiana have been closed since mid-March, though according to media reports, they could start submitting plans for reopening earlier this week.
NEW: Louisiana casinos begin to reopen today under rigorous health and safety policies. To highlight the impact of gaming, read our new Casinos & Communities: Louisiana report, an in-depth analysis of gaming’s economic and social impact in the Bayou State: https://t.co/bSOWxLdMwt pic.twitter.com/C8Nk0zHXvT
— American Gaming Association (@AmericanGaming) May 18, 2020
“So, if we vote for this resolution, we’re taking $29.3 million out” of the state treasury, Sen. Eddie Lambert was quoted as saying in the Baton Rouge Advocate, “on the hope that it generates more money than we give away?”
Neighboring Mississippi is one state that does not tax promotional play. It’s also a state that has huge relevance to Louisiana, which about 20 years ago lagged behind in legalizing gaming, allowing Mississippi to capitalize on bettors from nearby New Orleans. Mississippi began taking legal sports bets in August 2018, and the process is now repeating itself, with dollars bet on the New Orleans Saints going to Mississippi.