Louisiana Representative Roger Wilder’s (R-71) legislation to raise the state’s sports betting tax rate from 15% to 51% has been deferred at the lawmaker’s request. If approved, House Bill 22 would have aligned Louisiana’s sports betting tax rate with New York’s as the highest in the United States, in a bid to generate significant additional revenue amid a state budget deficit.
Wilder’s proposal, which received a hearing at the House Ways and Means Committee on Wednesday, sought to raise the tax rate and also included a provision to prevent sports betting operators from deducting promotional play credits from their taxable revenue. Analysts projected the 51% rate could have yielded $205.3 million in taxes for Louisiana in the fiscal year, a stark increase from the $52.2 million collected under the current rate.
However, the bill was deferred at Wilder’s request at Wednesday’s hearing, with the lawmaker saying he would continue to work on the proposal. It is unlikely to come up again in the current special session that must end by Nov. 25.
Supporters of the bill saw it as part of broader tax reform efforts championed by Governor Jeff Landry (R) to address Louisiana’s estimated $700 million budget shortfall. Opening the special legislative session, Landry told lawmakers: “This tax code is bloated, this tax code is broken, this tax code is incredibly out-of-date and this tax code is holding back our state.”
However, industry experts and stakeholders expressed deep concerns about the potential effects of Wilder’s bill on the sports betting market in Louisiana. Critics argued that the tax hike would hinder the state’s competitiveness and drive consumers to illegal markets.
Earlier in the week, Jeff Ifrah, co-founder of the iDevelopment and Economic Association (iDEA), urged Louisiana lawmakers to not consider the tax increase: “The introduction of HB22, proposing a staggering tax increase on Louisiana’s sports betting industry, marks a drastic and counterproductive shift in policy. Such a sharp increase would not only raise costs for operators but ultimately impact consumers, who will bear the brunt through less favorable odds and reduced promotional opportunities.”
Brandt Iden, Vice President of Government Affairs for Fanatics, also questioned the move’s alignment with Republican priorities: “It seems strange to me that Republicans in Louisiana are looking to increase taxes over 300% on the industry… Just seems oddly counterintuitive to me.”
The message seems to have reached Wilder, who said he has “some learning to do” on the subject. “I look forward to hearing the testimony from the industry, to gain a deeper insight of what the industry has with respect to their needs and their concerns on this issue,” the lawmaker said.
Louisiana is the latest in a string of states considering or implementing increased taxes on sports betting. In recent months, Illinois and Ohio raised their tax rates to 40% and 20% respectively.