Louisiana Governor Says Eight Is Great for Daily Fantasy Sports Tax Rate

Posted on: July 15, 2020, 11:55h. 

Last updated on: July 15, 2020, 02:07h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Louisiana Gov. John Bel Edwards (D) earlier this week signed off on a tax rate of eight percent on daily fantasy sports (DFS) contests, paving the way for DFS legitimacy in the Pelican State.

Louisiana Daily Fantasy Sports Tax
Louisiana Gov. John Bel Edwards is giving the thumbs up to a DFS tax rate of eight percent. (Image: Politico)

House Bill 64, which sets the DFS levy at eight percent while directing those proceeds to the state’s Early Childhood Education Fund, last month sailed through the state House by a vote of 82-11 and was later unanimously approved by the Senate, 36-0.

Edwards approved regulations for fantasy sports betting last month. The 8% tax rate will apply to the net revenue for all fantasy sports contests,” reports Bloomberg Tax.

Louisiana is the fifth-largest gaming market in the US, and like so many of its rivals, the state is scrambling for revenue because the coronavirus pandemic decimated the state’s gaming industry. Earlier this month, it was revealed that state commercial and tribal operators could lay off up to 10 percent of the total gaming workforce.

That news surfaced after policymakers there approved a tax cut on gross gaming revenue (GGR) won from promotional credits — legislation designed to help operators deal with slack demand against the COVID-19 backdrop. Last year, Louisiana gaming properties combined to generate GGR north of $1 billion.

Long Time Coming

Edwards’ signature on the DFS tax bill was a long time in the making. In November 2018, voters in 47 of 64 parishes approved DFS. But gamblers haven’t been able to indulge in the activity because of political wrangling over tax policy.

News that DFS is good to go in Louisiana is undoubtedly positive for DraftKings and FanDuel, two companies that function as a DFS duopoly in the US. The two firms spent $1 million on a 2018 campaign to support the legalization measure.

The parishes that voted in favor of allowing DFS were larger population areas, including East Baton Rouge, Orleans, Jefferson, St. Charles, St. Tammany, St. Bernard, and Lafayette, while the 17 rejecting it were smaller, rural regions in Northern Louisiana. Those that said “yes” to DFS in 2018 are home to 92 percent of the state’s population.

Underscoring the importance of finding new revenue sources in Louisiana, it took a special legislative session — the state’s first in nearly a decade — to set the tax rate for DFS. Typically, Pelican State lawmakers only consider tax measures in odd-numbered years.

Sports Betting Takes Its Turn

Companies like DraftKings and FanDuel still must be approved by the Louisiana Gaming Control (LGCB) to offer DFS contests in the state. But it’s expected those games will be up and running by the end of the year, perhaps giving gamblers and operators the opportunity to benefit from some part of the 2020 football season.

With DFS tax wrangling put to rest, lawmakers and voters can turn their attention to the sports betting question that will appear on November ballots.

Like the 2018 DFS measure, this year’s sports wagering bill will be considered on a parish-by-parish basis, meaning it’s likely Louisiana will join the list of legal sports betting states. If a majority of parishes vote in favor of the proposal, regulatory and tax policy will be considered in the 2021 legislative session.