Louisiana on the verge of implementing an increased tax rate for online sports betting

Authored by Rep. Neil Riser, the bill proposes raising the tax rate from the current 15% to 21.5%. This adjustment would align the online betting tax rate with that applied to brick-and-mortar sports betting operations within the state.

Initial proposals from Rep. Riser had sought a higher rate of 31%, but this was adjusted after negotiations with licensed sports betting operators.

The legislative journey of HB 639 through both chambers was marked by minimal opposition, with its final Senate hearing concluding within five minutes of discussion and without a single question posed.

The House had previously passed the bill with a 73-15 vote.

A key component of Louisiana’s HB 639 is the establishment of the Supporting Programmes, Opportunities, Resources, and Teams (SPORT) Fund.

This new fund is designed to allocate a portion of the state’s sports betting tax revenues directly to the athletic departments of Louisiana’s NCAA Division I universities.

Under the provisions of the bill, the SPORT Fund will receive 25% of the state’s total sports betting revenues.

These earmarked funds are designated for various university athletic expenditures, including scholarships, insurance coverage, medical care, facility enhancements and resolution of litigation settlements.

The fund also contributes to the Alston Awards, which provide additional academic achievement awards to student-athletes.

More states banking on new betting taxes

Louisiana’s move marks the third instance in 2025 of a state either increasing its sports betting tax rate or introducing new fees for operators.

Maryland recently enacted a state budget in late May that included an increase in its rate from 15% to 20%.

While Gov. Wes Moore’s initial budget proposal in January had called for an even higher rate of 32%, lawmakers ultimately agreed on the 20% compromise.

This budgetary framework, announced in March, also included significant cuts and new revenue streams as part of Maryland’s proposed $67.3bn budget for 2026.

Concurrently, Illinois lawmakers last week approved their state’s fiscal year budget, which introduces a new fee structure for sports betting operators.

This fee entails a charge of $0.25 for each of an operator’s first 20 million bets, escalating to $0.50 per bet thereafter.

This tiered fee system is projected to generate an additional $36m annually for the state.

Industry analysts suggest that this new fee structure could result in a substantially higher effective tax rate for high-volume operators like FanDuel and DraftKings, potentially ranging from 57% to 60% when combined with existing taxes.

Operators with lower betting volumes are anticipated to see an approximate 12.5% increase in their effective tax rate.