Louisiana fantasy sports bill
Legal Developments

Louisiana DFS Bill Passes House on Path to Legalization

A Louisiana daily fantasy taxation bill easily passed the state House of Representatives Wednesday, a year-and-a-half after voters in most parishes overwhelmingly approved the games.

If passed without changes by the Senate later this month, the final piece of the DFS legalization puzzle will finally pass out of the legislature after lawmakers couldn’t agree to a bill last year.

In 2018, voters in 47 of Louisianan’s 64 parishes (including the ten most populated) legalized DFS games in their respective municipalities, but without a follow-up tax bill, daily fantasy leaders such as DraftKings and FanDuel weren’t allowed to start taking players. Wednesday’s vote, taken as part of an extraordinary session to review the state’s response to the COVID-19 pandemic, underscored lawmakers’ vastly different approach to this bill compared to the year prior.

Assuming no unexpected legislative hold-ups, the bill will go to the desk of Gov. John Bel Edwards, who has largely supported gaming-related measures, for final approval in the coming weeks. In a best-case scenario, eligible Louisiana players could be able to set lineups by kickoff of the 2020 NFL season this fall.

Key Information

The 2020 bill imposes an 8% tax on net proceeds, which matches neighboring Mississippi’s rate and is line with the national average. Crucially, this rate is competitive enough that it should attract all top DFS operators to enter the market in all 47 approved parishes.

Even more significantly, the bill doesn’t allow video poker terminals DFS access.

The controversial push to allow thousands of terminals spread throughout the state to offer the games helped tank the bill in 2019. Louisiana would have been the only state in the country that allowed retail gaming terminals to allow players to set lineups, which lawmakers found logistically and politically unpalatable.

The push for DFS terminal access spilled into a larger legislative debate about single-game sports wagering. Sports betting backers backed exclusive access for state casinos and horse tracks, but when an amendment was added to include the terminals, it effectively sank both wagering and DFS legislation.

Facing a multi-billion dollar budget shortfall in the wake of the coronavirus outbreak, legislators earlier this year easily passed a sports betting ballot measure that will allow voters to approve the games within their respective parish, a similar move as the DFS referendum two years earlier. The daily fantasy taxation bill that proved so controversial a year earlier now too seems on a similar path, one that won’t require any further voter approval.

Next Steps

With casinos, horse tracks and, so far, video poker terminals content to stay out of daily fantasy, it appears the bill won’t find much opposition in the Senate.

Leaders in both chambers prioritized DFS tax legislation among more than 40 priorities for a special session to deal with budget matters and other issues not resolved by the June 1 conclusion of the regular 2020 session. Facing a looming budget and health crisis, high profile elected officials in both parties have helped pushed through a wide range of new legislation with relative ease during the extraordinary session.

Bipartisan groups of rank-and-file members in both chambers have also largely supported any new revenue source, even those as comparatively minor as daily fantasy sports taxes. Best-case estimates see DFS taxes generating a few million dollars annually for a roughly $25 to $30 billion state budget.

Still, multiple House members ahead of a committee vote earlier this month praised the bill, which advanced to the full floor without opposition. There seems little indication an upcoming Senate committee hearing will be any different, nor would a subsequent vote on the full Senate floor.

All this positions Louisiana daily fantasy players to set lineups legally as early as this year, nearly two years after millions of them voted for the right to do so.

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