Louisiana Ices Controversial Gaming Tax Hike

Louisiana lawmakers, facing a massive US$700 million (£545.7m) state budget deficit, have ducked a controversial proposal to hike gambling taxes from 15 to a swingeing 51 percent — in line with sports betting levies in New York.

The proposed increase was the brainchild of Republican State Representative Roger Wilder, who saw the move as one way to plug Louisiana’s budget shortfall.

But Wilder’s HB22 proposal, despite bi-partisan support, drew outrage and backlash from the local gambling industry and has now been put on ice.

This week he asked the state’s Ways and Means committee to temporarily defer passage of the bill until further notice.

Louisiana lawmakers are currently sitting in a Special Session, which ends on November 25, in a bid to solve the state’s tax conundrum.

Daunting

They aim to reduce income tax, offset it with increases in sales tax, and balance the budget before the year’s out.

But complicating their efforts further is a daunting budget deficit projected to exceed US$700 million.

Wilder filed HB22 earlier this month in a bid to square the circle by raising taxes on Gross Gambling Revenue (GGR).

Had his proposed legislation passed, it would have created an estimated US$150 million (£118 m) in additional annual tax revenue based on FY 23-24 GGR figures — a substantial boost to state coffers.

Wilder has not given up hope on HB22. He insists it’s only been “temporarily deferred” and not abandoned.

He plans to revisit and revise the proposal, addressing the concerns raised by the gambling industry, and then resubmit. But not during the current Special Session.

Crossroads

Louisiana’s next regular legislative session starts in January, leaving the gambling industry uncertain about what’s to come.

Since 2018, 38 U.S. states have legalised sports betting, each creating its own regulatory framework and tax rules — some as low as six percent.

But, the weight of budgetary pressures and regulatory adjustments led several states to reconsider their tax rates shortly after their market launch.

Ohio, for example, was the first state to double its tax rates from 10 to 20 percent in 2023.

In May this year Massachusetts took its turn, attempting to more than double gambling taxes from 20 to 51 percent but ultimately failing.

Then Illinois followed suit in July, increasing gambling taxes from 15 percent up to a maximum of 40 percent.

Louisiana now sits at the tax crossroads.