Sports booking companies cashing in on mobile betting

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Nathan Wilson | Reporter
Over 165,000 unique account holders, or 3.6% of the Louisiana population, placed a bet over a mobile sportsbook app during the opening weekend Friday, Jan. 28 to Sunday Jan. 30, a higher rate than wealthier states like New York and a greater volume than more populous Tennessee.
As bettors take advantage of this new addition to sports entertainment, the state estimated it will generate additional tax revenues of up to $30 million. The legislature has allocated 10% of revenues to the 55 parishes that opted to participate during last year’s referendum, but it remains to be seen exactly what amount state and local coffers will enjoy.
Ronnie Johns, Chairman of the Louisiana Gaming Control Board (LGCB), admits that the formula for dividing funds between parishes is still being developed, but adds that the addition of mobile sports betting to the state’s revenue stream offers a legal alternative to unregulated and untaxed betting that has gone on within the state for years. That problem was only getting worse as offshore gaming websites have proliferated. “No tax revenue was derived from that,” he emphasized. “Also, there is never a guarantee that an offshore gaming website will pay out winnings.”
As Laura Jeffcoat, Administrator of the Natchitoches Tax Commission, points out, sports booking companies will be exempt from sales taxes and occupational licensing fees which feed directly into local treasuries. Her research concluded that sports betting companies are only subject to local sales taxes on equipment such as computers or software. Further, individual parishes are allowed to levy a 2.5% tax on admissions charged for riverboat casinos, but most are concentrated in Louisiana’s metropolitan areas. Jeffcoat summed up the information she provided succinctly, “Sports betting has excellent lobbyist(s).”

This article published in the Feb. 5, 2022, print edition

Other allocations specified within the law include 25% toward early childhood education, 2% to the Health and Behavioral Wellness Fund and 2% to the Disability Affairs Trust Fund. All of these have annual caps in place, after which additional revenue will join the state’s share as part of its general fund. An additional 2.5% of the tax revenues will be directed into purse money for the horse races at the four pari-mutuel tracks in the state.
When casino gaming was legalized in Louisiana in the early 90s, a major justification for the move was to provide employment. Casinos promised to provide an economic boon for any region of the state fortunate enough to dock a riverboat casino. With mobile gaming, however, the physical presence of sportsbooks could be located anywhere and require fewer employees to operate. Although mobile sportsbooks would still need tech savvy workers to manage wagers pouring in over their platforms, it is not clear where the software developers and data centers are based.
Johns suggested that the opportunity to reach bettors who shun casinos, or are willing to travel from Texas and Mississippi to place bets, creates an incentive for Louisiana to offer mobile sports betting. The higher tax rate of 15% levied on mobile sports betting, compared to only 10% for onsite betting, could also offset the lack of an employment argument.
One argument against legally sanctioned gambling activity is that it displaces other types of economic activity as money that could be spent on goods and services within a community is instead lost in wagers that favor the house. It remains to be seen whether the 10% of the 15% that trickles back to local governments from the money wagered by Louisiana Sports fans proves to be a good bet.