Louisiana sports betting
Legal Developments

What Louisiana Could Expect for Sports Betting Tax Revenues

The Louisiana sports betting ballot measure bill rapidly advancing through the legislature would generate millions in new tax revenues. That’s good news for a state struggling with a massive budget shortfall, but even a best-case scenario, legal sports betting would be just a small part of the solution.

Initial estimates are hard to come by with the ballot measure still not passed and the full extent of sports betting undetermined, but officials believe Louisiana would rival sports betting in neighboring Mississippi, which garnered $5.6 million in tax revenue during its first 12 months taking bets, if it doesn’t approve full mobile wagering.

For context, state Sen. Ronnie Johns, a sponsor of one of the sports betting bills, said earlier this month the state was already facing a $100 million budget shortfall for its approximately $30 billion annual budget. As the impacts of the coronavirus outbreak become clearer, the shortfall will likely grow – and the budget may very well shrink.

That’s (part of) why any new revenues would be welcomed in Louisiana, which by law must balance its budget.

Louisiana Gaming Details

Louisiana has among the highest totals of per capita COVID-19 cases of any state. Its revenues are largely dependent on energy, which has been crippled by diminishing prices and lessening demand, as well as tourism, which has plummeted since social distancing measures went into place in March.

The nation’s fifth-largest commercial casino market also went the better part of two full months without any revenues until several casinos reopened this week. The state’s riverboat and land-based casinos attracted nearly 2 million visits, generated more than $165 in revenue and distributed more than $35 million in taxes as recently as January 2020.

Sports betting won’t be a cure for the state’s growing budget woes, and won’t even exist rival revenues from the casinos, horse tracks or video lottery terminals. And even if the ballot measure is approved by the legislature and subsequently by voters during the Nov. 3 election, the state likely wouldn’t see its first bet until late in 2021.

Lawmakers would need to pass a follow-up bill during the 2021 session, which isn’t scheduled to begin until April. Once passed, the Louisiana Fiscal Office estimates it would take roughly five months to finalize regulatory and testing protocols.

The fiscal office also projects legal wagering would require roughly $350,000 in new equipment as well as $1.75 million in new personnel and operating costs.

That doesn’t mean any new monies wouldn’t be appreciated for beleaguered state coffers, when – or if – it comes to pass.

Legislative Actions

Before the first bet, lawmakers must pass the ballot measure before the 2020 session ends June 1. This could be the simplest step.

The Senate has already approved two ballot measure bills, both of which are now awaiting action on the House floor. Meanwhile the House could send its version of the sports betting ballot measure to the Senate as early as this week.

With minimal opposition so far, there appear good odds at this point the bill will pass, and then every Louisiana voter will be able to vote to approve legal sports wagering within their home parish. The bill was intentionally worded to only offer a simple yes-no question for voters while punting the key regulatory details such as purveyor access and tax rates to a future debate.

It is similar to a 2018 ballot measure which asked voters to approve daily fantasy sports within their parish. The majority did so, and with most parishes having either a casino, horse track, video poker terminal or some combination of the games already, it appears many, if not most, municipalities will do so again.

If at least one parish approves sports betting, lawmakers will have to approve legislation that lays out which entities can take sports bets as well as how they will be taxed. New tax bills can only be debated in odd-numbered years, so it means the legislative solution won’t come until next year at the earliest.

That’s if it is to pass at all. Louisianans are still awaiting daily fantasy sports after lawmakers failed in 2019 to pass a taxing mechanism for the games, which in turn kept them illegal.

Sports betting, like DFS, also has conflicts between the state’s casino industry and video poker operators, both groups which have considerable influence on lawmakers. Instead of just mobile devices, terminal backers sought to pass legislation which would allow daily fantasy sports to be offered at the machines – an option not offered anywhere else in the country.

That idea faltered last year, but it reiterated the rifts between the casinos and horse tracks against the video poker operators. When the poker operators sought access to DFS and sports betting, it led the casino to withdraw support for the legislation.

Sports betting could be even more lucrative than DFS, and it appears another fight could break out over legislation in 2021.

Mobile Betting Significance

The battle over land-based operations aside, online access is a far bigger question for Louisiana’s sports betting revenue.

Assuming voters approve sports wagering in most or all of the parishes with casinos and horse tracks, and lawmakers allow only those entities to take bets within their properties, Louisiana’s revenues will likely compare to Mississippi’s, which has a similar number of casinos and also prohibits off-site wagers. Mississippi sports betting has generated roughly $8 million in taxes since it first started taking bets in August 2018, with the majority of those dollars coming during the professional and college football seasons.

Should Louisiana only allow in-person betting at the casinos and tracks – or even if it extends that to the thousands of video poker terminals – tax dollars would, like in Mississippi, pale in comparison to states with online markets.

New Jersey sees nearly 90% of their wagers from mobile bettors, generating more than $7 billion in handle since it began taking bets in 2018. Mississippi has seen roughly $600 million during that same time. Adjusting for population, and taking into account its proximity to the New York City metro area, the online access has helped New Jersey trounce Mississippi on a per capita basis.

Assuming Louisiana passes a tax rate around the national average of between 10%-15%, the option to take mobile bets in every parish that approves the 2020 ballot measure could be the key determinant if the Bayou State’s revenues will look more like New Jersey’s or Mississippi’s.

Similar Posts