New Louisiana Bill Would Bring Massive Tax Hike for Sportsbooks

It may soon become more expensive for sportsbooks to operate in Bayou State.

A new sports betting bill proposed by State Representative Roger Wilder has been sent to the House Ways & Means Committee. The proposal calls for raising the state’s 15% tax rate on sports betting operators to 51%. That would tie the market with New York and Vermont for the highest in the country.

In addition to raising the tax rate, the bill would also end promotional betting. That takes away a significant marketing tool for operators and is certain to draw their ire as the bill is considered.

Proposal Will Face Difficult Road

While more money for the state will be an easy sell to many legislatures, sportsbooks will invest heavily in defeating this bill. The massive hike in tax rate in a middling market will take a significant cut of sportsbook profits, which they won’t give up without a fight. While higher tax rates have been common over the years, few have been as aggressive as the one currently being considered.

The loss of profit is bad enough, but the bill would also take away the tool sportsbooks use to recruit new bettors. This is almost unheard of in the US, and operators won’t be eager to set that precedent for other markets.

Operators have deep pockets and strong influence in the legislature, which they will soon use to ensure the toughest parts of this bill doesn’t become law.

Bill Could Significantly Harm Louisiana Market

Sportsbooks have made a lot of empty threats in the face of tax hikes, but have buckled each time. However, Louisiana is not a great market. A massive increase could lead to some deciding to exit the market altogether.

If Operators don’t leave, they will undoubtedly begin watering down odds. That will make it hard for bettors to win much, helping sportsbooks make up some of the profit lost due to the bill. Bad odds and no promotions will make sports betting far less appealing for residents, leading to the market regressing over the next few years.

Can the State and Operators Reach a Deal?

Sports betting operators in Louisiana will see this bill as a slap in the face. The proposed changes are so extreme that it is hard to take them as anything but a challenge. That will change the relationship between the two sides for the worse, leading to an ugly battle. 

As far apart as operators and legislatures are, there is hope that a deal can be reached. Several states have proposed massive hikes that are far smaller once approved. The most recent example came from Illinois, where the state implemented a tiered tax system after a 51% hike was proposed.