Louisiana Senate approves online sports betting tax hike, bill heads to Gov. Landry

Louisiana is on the verge of raising its online sports betting tax rate, while Flutter Entertainment is passing on new tax costs to customers in Illinois, highlighting growing fiscal pressure on U.S. sportsbooks amid a wave of tax hikes.

The Louisiana Senate on Sunday approved House Bill 639 in a 35-3 vote, raising the tax rate on online sports wagers from 15% to 21.5%. The legislation, which aligns the online tax with rates on brick-and-mortar casino gaming, now heads to Governor Jeff Landry for final approval.

“It was worked out with the industry in agreement,” said Senator Stewart Cathey, who introduced the bill in the Senate. “There is no opposition.”

Retail sportsbooks will continue to be taxed at 10%. An earlier version of the bill had proposed a 32% rate for online sports wagering but was amended in the House prior to final passage.

A portion of the new revenue — 25% — will be directed to the newly created SPORT Fund (Supporting Programs, Opportunities, Resources and Teams) for Division I universities. The money will support scholarships, insurance, medical coverage, and facility improvements.

However, the new revenue cannot go toward paying college athletes. A federal judge signed an order last week allowing U.S. colleges and universities to begin paying athletes, in addition to the use of names, images, and likenesses (NIL) since 2021.

“It is specifically in the legislation that it cannot be used to fund NIL or to make direct payments to athletes,” Cathey said. “Absolutely not, I’m fundamentally opposed to that.”

If enacted, Louisiana would become the third U.S. state this year to raise its online sports betting tax, following similar moves by Maryland and Illinois. Several other states, including New Jersey and Ohio, are also weighing adjustments to gaming tax structures.

In Illinois, Flutter, the parent company of FanDuel, said it will implement a $0.50 transaction fee on all bets placed on its platform in the state starting Sept. 1. The move comes in response to Illinois’ new levy, which includes a $0.25 tax on the first 20 million annual bets and $0.50 thereafter. The state also introduced a progressive revenue-based tax scale topping out at 40% for operators with adjusted gross revenue over $200 million.

Flutter CEO Peter Jackson criticized the policy shift, saying it punishes major operators and could drive bettors to unregulated platforms.

“We are disappointed that the Illinois transaction fee will disproportionately impact lower wagering recreational customers while also punishing those operators who have invested the most to grow the online regulated market in the state,” Jackson said.

He added: “We also believe the introduction of the fee will likely motivate some Illinois-based customers to bet with unregulated operators. These operators do not contribute tax revenue to the state, will not collect the newly announced transaction fee and do not offer the same levels of customer protection.” 

Flutter said the transaction fee would be removed if Illinois reverses its decision.

Rival operator DraftKings said it is also considering how to respond to the tax changes.

“In response to the recent and prior mobile sports wagering tax increases in Illinois, DraftKings anticipates taking action and expects to share more information soon,” the company said in a statement to Bloomberg.

Last year, DraftKings backed away from a proposed surcharge in high-tax states after FanDuel initially chose not to impose one.