Louisiana Sports Betting Tax Increase Could Help Fund College Athletic Departments

Louisiana Sports Betting Tax Increase Could Help Fund College Athletic Departments

A proposal to significantly raise the sports betting tax on online sportsbooks in Louisiana could support college athletics, according to the bill's advocate. 

House Bill 639 was presented to the Louisiana State Capitol in Baton Rouge on April 16. The proposal originates from state Representative Neil Riser (R-Columbia). 

HB639 would increase the tax rate on revenue from online sportsbooks and allocate a significant part of the additional funds to public universities participating at the NCAA Division 1 level, specifically LSU, Louisiana Tech, Grambling, McNeese, Nicholls, Northwestern, Southeastern, Southern, the University of New Orleans, UL Lafayette, and UL Monroe. 

On Monday, Riser’s HB639 passed the House Committee on Appropriations by a vote of 20-1. Rep. Jerome Zeringue (R-Houma) was the only opposer, believing that allocating such funds from sports betting to state schools might lead to budget issues down the line. 

Backing and Dissent 

Riser’s proposal recommends increasing the tax on online sports betting to 32.5%. If passed, HB639 would mandate that 25% of the revenue from the online sportsbook that the state gains be allocated to a newly established fund known as Supporting Programs, Opportunities, Resources, and Teams, or SPORT. 

SPORT would distribute its yearly revenue equally among the 11 D1 athletic departments. Financial forecasts indicate that the schools will obtain nearly $3 million each year. 

Although it represents only a small fraction of the over $200 million that LSU will invest in its sports programs this year, the projected $2.8 million benefit would significantly enhance athletic funding at numerous other institutions.

"The need is high,” Riser said of the importance of college sports funding in an interview with the Louisiana Illuminator . “Even at like the University of Louisiana at Monroe, just to be competitive in recruiting, it takes facilities.”

The SPORT fund will not offer separate funding for name, image, and likeness (NIL) initiatives that enable student-athletes to earn money while remaining amateurs attending school. 

Louisiana’s numerous authorized online sportsbook providers naturally opposed HB639. Representatives from companies such as FanDuel, DraftKings, and BetMGM informed the committee that the state's existing 15% tax on online sports betting is already 1% above the national average in states that have regulated internet sports betting. 

The sportsbooks contended that increasing their online tax by over twofold would reduce their competitiveness against illegal offshore sports betting sites that do not incur any tax. They will have to restrict odds, provide fewer promotions, and reduce incentives for new account registrations, they stated. 

Additional Advantages of Sports Betting 

The tax revenue from online sports betting in Louisiana is presently allocated to early childhood education (25%), local governments (10%), and programs for gambling addiction (3%). The other 62% goes to the General Fund of the state. 

Riser's legislation would maintain support for the three designated sports betting beneficiaries at their existing levels. Along with the advantage for college athletics, Riser suggests allocating 3% of the online sportsbook tax revenue to the Louisiana Postsecondary Inclusive Education Fund to support students with disabilities. The remaining 34% would be allocated to the General Fund. 

HB639 wouldn’t affect retail sports betting or the 10% tax that bookmakers pay on in-person bets. The legislation has now advanced to the entire House floor for additional review.