Tax Changes in Sports Betting: Louisiana and Ohio at Opposing Ends

The debate over sports betting taxes has taken center stage in both Louisiana and Ohio, albeit with contrasting approaches. In Louisiana, a proposed significant tax increase on online sports betting has been temporarily shelved, while Ohio is considering a reduction in its current tax rate.

Louisiana Puts a Hold on Major Online Sports Betting Tax Hike

Louisiana lawmakers recently halted House Bill 22, proposed by Rep. Roger Wilder (R-Denham Springs). This bill sought to increase the tax rate on online sports betting from the existing 15% to a steep 51%, a figure that would place Louisiana alongside states like New York and Vermont, known for having the highest sports betting taxes in the nation. The proposed increase was part of a broader effort championed by Governor Jeff Landry to offset revenue losses tied to anticipated state income tax cuts.

According to estimates from the Legislative Fiscal Office, raising the tax to 51% would potentially boost state revenues by approximately $151 million annually. However, during a recent House Ways and Means Committee meeting, Rep. Wilder decided to pause further discussion on the bill, citing the need to better understand the industry and gather input from stakeholders, as reported by the Louisiana Illuminator. This decision effectively sidelines the proposal for the remainder of the current special legislative session, which concludes on November 25.

Industry representatives voiced substantial concerns about the proposed tax hike. Samir Moad, representing Caesar’s operations in New Orleans, emphasized that such a dramatic increase could deter new investments in Louisiana. He cited Caesar’s financial backing of Caesar’s Superdome as an example of commitments that might not have materialized under a 51% tax structure.

The proposed bill garnered support from a diverse coalition, including Louisiana Progress, a progressive group, and the conservative Louisiana Family Forum. House Speaker Pro Tempore Rep. Mike Johnson (R-Pineville) also backed the measure, arguing that additional revenue could address the social costs associated with gambling addiction. Johnson highlighted the notion that industries contributing to public health issues should also be involved in mitigating their effects.

Currently, Louisiana’s online sports betting market handles roughly $3 billion in bets annually, generating between $250 million and $300 million in revenue for operators. Under the existing 15% tax rate, the state receives approximately $54 million in tax revenue. Had HB 22 passed, projected tax revenue for the 2023-24 fiscal year would have surged to $182.7 million. However, experts expressed skepticism about whether Louisiana’s smaller market could sustain such a high tax rate, noting that larger states like New York have managed to maintain a 51% rate despite industry resistance.

Ohio Considers Reducing Sports Betting Tax to 10%

Meanwhile, Ohio is taking a different route. State Senator Niraj Antani has introduced Senate Bill 190, aiming to reduce the state’s sports betting tax rate from 20% to 10%. Antani, who played a key role in legalizing sports betting in Ohio in 2022, believes the original 10% tax rate was optimal for fostering industry growth and competitiveness. His proposal is currently under review by the Senate Finance Committee.

In a statement to the committee, Antani argued that Ohio’s 20% tax rate, implemented as part of the 2024-2025 state budget, places the state at a disadvantage regionally and nationally. He highlighted that Ohio ranks sixth among 38 states with legalized sports betting in terms of tax rate. By comparison, states such as Iowa and Nevada impose significantly lower rates. Antani warned that neighboring states like Kentucky, Michigan, Indiana, and West Virginia offer more favorable tax conditions, potentially luring businesses and bettors away from Ohio.

Antani expressed a preference for a 6.75% tax rate, the lowest in the nation, but viewed a return to 10% as a reasonable compromise. He contends that a lower tax rate would sustain revenue generation while enhancing market appeal and stability. Governor Mike DeWine, however, previously endorsed the 20% tax rate, which the Ohio Legislature approved to increase state revenue, primarily directed towards education (98%) and combating problem gambling (2%).

Despite the intended financial benefits of a higher tax rate, Antani maintains that reducing the rate would not only keep Ohio competitive but also ensure a longer-lasting and more robust market for both betting operators and consumers. If passed, Senate Bill 190 would amend Section 5753.021 of the Ohio Revised Code, reducing the tax rate on sports betting income. The bill, if enacted, would take effect on the first day of the month following its passage, reflecting Antani’s vision of balancing state revenue needs with market growth and competitiveness.

Sports Betting Tax Landscape Elsewhere

In the United States, sports betting tax rates vary widely from state to state, reflecting diverse approaches to regulation and revenue generation. For example, New Jersey, which has become a prominent hub for sports betting since legalization in 2018, imposes an 8.5% tax on in-person bets and a 13% rate on online bets. This relatively moderate structure has contributed to its rapid market growth and high revenues. Similarly, states like Pennsylvania apply a higher tax rate of 36%, which includes both a state tax and a local share assessment, making it one of the highest in the country. Despite the high rate, Pennsylvania remains a key market, though some experts argue it may deter smaller operators from entering.

In contrast, states like Nevada have maintained a more traditional tax rate of 6.75% for sports betting revenues, which is among the lowest in the U.S. As a longtime leader in the gambling industry, Nevada’s tax structure has attracted a variety of operators and maintained its competitive edge despite new challengers in the market. States such as Colorado and Iowa have also opted for lower tax rates—10% and 6.75%, respectively—enabling them to strike a balance between generating state revenue and fostering competitive market conditions.

In Europe, sports betting tax policies differ significantly across countries, often based on historical betting practices and local regulations. For instance, the United Kingdom applies a 15% tax on gross gambling revenue for licensed operators. This model has contributed to a highly competitive market with numerous operators and a wide array of options for bettors. Meanwhile, Germany’s sports betting taxes include a 5% levy on each bet placed, which some critics argue limits the profitability of operators compared to other markets. Spain and France have distinct tax structures as well, with taxes based on gross gaming revenue or turnover, affecting how competitive their markets remain compared to other European counterparts.

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