Monday, May 20, 2024

Where does Louisiana Stands on Creating Rules for Sports Betting?

by BIZ Magazine

By Ryan Nelsen, Matthew Bennett, and Mahogani Counts | LSU Manship School News Service

Voters in most parishes supported the legalization of sports gambling last Nov. 3, but it may be 2022 by the time bettors are legally allowed to wager in Louisiana on football and other games.

With 55 of the 64 parishes voting in favor of the proposal, legislators will use this spring’s session to set tax rates and create a plan for betting on sporting events.

The Louisiana Gaming Control Board will then create a regulatory model for gamblers and bet takers to use. Mike Noel, the chairman of board, said he expects the rules to be similar to ones that the board recently approved for fantasy sports betting.

Noel said the State Police’s gaming enforcement division will begin taking applications from fantasy sports operators after the rules are published on Feb. 20.

In 2018, voters in 47 parishes approved betting on daily fantasy games in which users create virtual rosters of real athletes and hope they record better statistics than the groups assembled by other players. The gaming board decided last year that it would levy an 8% tax on the net revenue from fantasy gambling to help fund early childhood education. Louisiana was one of only seven states that did not allow fantasy sports betting in 2020.

Louisianans eager to bet on real sports hope that legislators and the board will not take as long as long to create the rules for betting on real sports. Sen. Ronnie Johns, R- Lake Charles, sponsored the bill that legalized sports betting, and he expects lawmakers to have a plan before the Legislature gathers in April for a two-month session.

“I will assure you that we will have an agreement between all parties before the legislature in April with the final proposal,” Johns said. “There is absolutely a lot of discussion going on right now, among all parties involved.”

As Louisiana struggles to finance its operations given the economic effects of COVID-19, sports gambling could provide the state with extra revenue and jobs. While a legislative fiscal note written in 2018 estimated fantasy sports betting would generate $375,000 in tax money in the first year, sports gambling could create more.

One key decision will be whether to allow online gambling or limit betting to in-person gambling on casino grounds. If the legislators approve online gaming, the gaming board will have to set up geolocation borders, technology that would keep the apps from working in the nine parishes that did not approve the betting.

“I’ve personally looked at the mechanism of geofencing, and it’s a very safe way of regulating gaming and betting,” Johns said. “The technology has been proven in many other states.”

In the two-and-a-half years since the U.S. Supreme Court struck down a 1992 ruling against state-authorized sports gambling, 20 states have legalized sports betting. Louisiana and five other states have passed legislation and are working toward taking their first bet.

Several states have had trouble opening books and trying to find the sweet spot of private, tribal and state-run gambling networks to earn tax revenue. There are success stories like Pennsylvania, which has earned more than $99 million in tax money since November 2018, according to Play Pennsylvania. But states like Delaware have had more modest success. It opened three retail sportsbooks and made $8 million in tax revenue in 2020.

Mississippi, which passed in-person betting in 2018, took in over $5.25 million in 2020 by taxing sports bets. This occurred over a 10-month period as the state closed its casinos in the spring due to the spread of COVID-19. An attempt to expand to online gambling in Mississippi died in a legislative committee.

Mississippi taxes casinos 12% for operating a sports book, and 4% of the money goes to local governments. In 2020, Mississippi also saw increases in tourism in towns with casinos and a $50 million increase in total revenue at its coastal casinos from two years earlier.

Ten states have opened online gambling to multiple providers, the two most notable being DraftKings and FanDuel, which allow users to play fantasy games and place bets. In December, CQ Holdings, a company that partners with DraftKings at a casino in Illinois, reached an agreement to buy the Belle of Baton Rouge riverboat casino.

The early returns in other states have been mixed. The Oregon Lottery created a one-app system named Scoreboard, which allows bettors to place bets anywhere in the state. However, the app came at a steep initial cost. Matt Shelby, a representative for the Oregon Lottery, said the state is in the black after accruing over $20 million in tax revenue since October 2019.

While there is a way to go regarding specifications for Louisiana’s platforms for bettors, Sen. Johns said the Legislature knows that taxation will look a lot different than it does for the state lottery and casinos.

“We tax the 15 riverboat licenses and the land-based casinos a 21 percent tax,” Johns said. “Sports betting won’t be taxed at that rate. We have to be very careful in not overtaxing sports betting because, if you do so, you’re going to severely limit the number of entities around the state that would be willing to inject into the sports betting business.”

But for now, any Louisiana citizens who are looking to gamble on upcoming 2021 sporting events: no dice. The luck may be better in 2022.

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