Louisiana lawmakers intend to increase the tax rate that online sportsbooks are required to pay the state for allowing sports betting on the internet. 

If Louisiana Gov. Jeff Landry (R) approves House Bill 639, the online sportsbook operators in the Bayou State would experience an increase in their effective tax from 15% to 21.5%. 

Introduced by Rep. Neil Riser (R-Columbia), HB639 passed the House in May with a 73-15 tally. The House approved the increase in taxes on online sports betting after reducing Riser's originally requested tax hike to 32.5%. The Senate approved the legislation on Sunday with a vote of 35-3. 

Even with pushback from the sportsbooks arguing that an increased tax will further disadvantage their legal, regulated businesses against illegal, unregulated offshore online sportsbooks, state legislators supported Riser’s plan to assist in funding student-athletes. A significant share of the online sports betting tax will be allocated to a newly established state account known as the Supporting Programs, Opportunities, Resources, and Teams Fund, or the SPORT Fund. 

FUND SPORT 

By Landry’s endorsement, HB639 would require that 25% of the tax revenue from Louisiana’s online sportsbooks be allocated to the SPORT Fund. The account would serve to support the athletic departments of public universities in the state that participate in NCAA Division I athletics at both the Football Bowl Subdivision and Football Championship Subdivision tiers. 

This would not only qualify a prominent, financially stable sports institution such as Louisiana State University (LSU), but it would also allocate resources for the state’s numerous smaller public DI schools, including McNeese, Grambling, and Southern University. Twelve institutions would be eligible for SPORT funding. 

The SPORT Fund would supply funds for scholarships, insurance, healthcare coverage, facility improvements, legal settlement costs, and Alston Awards. Alston Awards are funds related to education granted to student-athletes. The SPORT Fund cannot be permitted to "replace other grants or scholarships." 

State financial forecasts indicate that eligible schools are expected to receive approximately $2 million each year from the SPORT Fund. 

HB639 aims to mandate that 3% of the tax revenues from online sports betting be designated for the Louisiana Postsecondary Inclusive Education Fund. 

The state initiative, enacted via legislation in 2022 and endorsed by Gov. John Bel Edwards (D), allocates funds to colleges and universities for the “development, management, and growth of inclusive programs.” It also finances the "technical assistance" for developing such programs and "spreading information on inclusive programs in Louisiana to students with intellectual or developmental disabilities and their parents or guardians." 

The leftover tax from online sports betting would be allocated to the state's General Fund. 

Offshore Migration? 

Louisiana’s top online sportsbooks unsuccessfully pressured state legislators to reject HB639, arguing that increased taxes would force them to reduce their odds and cut back on promotional expenditures. It remains to be seen if some bettors will shift to offshore sites with better payouts if Landry successfully enacts the bill into law.

"A massive tax hike … means fewer promos, smaller bonuses, and worse odds for Louisiana sports fans,” said the Sports Betting Alliance, a trade group representing FanDuel, DraftKings, BetMGM, and Fanatics. “That will push players back to the shady illegal market, putting our current tax revenue and consumer safeguards at risk.”

Landry is anticipated to sign HB639.