Louisiana Eyes Tax Hike on Sports Betting as HB22 Targets Operators and Promotions

Louisiana is considering a significant change to its online sports betting tax structure. A new bill, HB22, introduced by Republican Representative Wilder, proposes increasing the state’s gross gaming revenue (GGR) tax on online sports betting. If passed, the tax rate would rise to 15%, aligning Louisiana with New York for the highest rate in the nation.

Impact on Operators and Promotional Play

Alongside the tax increase, HB22 also aims to end the practice of offering promotional credits to players. Currently, Louisiana sports betting operators can issue promotional credits to attract customers, and these credits are deducted from the licensee’s tax calculations. For the 2023-24 fiscal year, operators in the state distributed $44.4 million in promo credits. This bill would make promotional play no longer deductible, potentially increasing the tax burden on operators.

Filed on November 10, 2024, HB22 is now under review by the Ways and Means Committee in the Louisiana House, where Representative Wilder is a member. The bill will need a two-thirds majority approval from both the House and Senate to pass.

The bill’s proposal has already sparked significant criticism within the industry. Brendan Bussmann from B Global Advisors expressed concern, stating, “There’s only so many times you can go to the golden goose before you kill the goose, and this is one of those times when you’re going to kill the goose.” Bussmann emphasized the need for the industry to educate lawmakers about the impact of such measures on the sports betting market.

HB22 comes amid a broader tax reform package backed by Governor Jeff Landry. The Governor is advocating for comprehensive changes to the state’s tax code to address an estimated $700 million budget shortfall. This reform includes a shift to flat corporate and income tax rates, with Landry calling the current tax code “bloated” and “broken.”