Louisiana sportsbook operators face clear limits on promotional play deductions under a new state law set to tax effect in July.
Starting July 1, each Louisiana sports betting licensee will be limited to $5 million per year in free play credit – regardless of how many sportsbooks are partnered with each licensee. Most licensees in the state have only one sportsbook partner, but state regulators say the limit applies whether they have one or two partners going forward.
The clarification comes under 2022 Senate Bill 290, sponsored by Louisiana Senate President Page Cortez, R-Lafayette. The bill was signed into law by Gov. John Bel Edwards on June 3 after receiving final passage May 25 by a vote of 90-3 in the Louisiana House of Representatives.
The provision relates to free bets sportsbook operators offer new customers as enticements to register and make deposits. How revenue derived from these promotions is taxed differs from state to state.
Keeping Free Play In Line
Cortez told his legislative colleagues at a May 10 committee hearing that SB 290 will ensure nontaxable revenue is limited to each licensee, not each app.
“We didn’t (plan on) $5 million of promotional play per app. It was just for the licensee,” Cortez to the House Committee on Administration of Criminal Justice. “We don’t get tax money on promotional play.
“We didn’t want it to be so much … that we wouldn’t end up getting any revenue.”
Seated with Cortez at the hearing was Louisiana Gaming Control Board Chair Ronnie Johns, a longtime Louisiana State Senator who resigned his seat last year to become the state’s top gaming regulator. Johns told Gaming Today in a May 24 phone interview that sportsbooks haven’t tried to claim more than $5 million in free play since sports betting launched last year – although some licensees have claimed millions in promotional credit in the first few months.
That said, SB 290 will erase any doubt about how much free play is allowed going forward, according to Johns.
SB 290: The ‘Clean-Up Bill’
According to Johns, SB 290 was filed after state net proceeds dipped due to promotional play deductions by licensees shortly after retail launch in 2021 and mobile launch in Jan. 2022.
One licensee, he said, claimed all its free play within 10 days of the state’s mobile sports betting rollout in January.
Now net proceeds from Louisiana sports betting are averaging out. The state has $10 million in sports betting revenue it didn’t have four months ago, said Johns. A lot of that revenue was generated by nontaxable promotional play.
But SB 290 – what Johns called “a clean-up bill” – is there just in case.
“It makes sure in the event that a licensee uses multiple providers – they use two providers, for example– they can’t stack it,” said Johns. “It’s just to make sure that not each (separate) provider can claim the $5 million of deductions.
“It is going to be a total of $5 million per licensee, no matter how many providers that they use – whether it is one, or two.”
Louisiana Sports Betting In Review
A total of 20 sports betting licensees – including a mix of casinos and racetracks – are allowed under Louisiana’s 2021 sports betting law. Each licensee is allowed up to two skins (industry parlance for mobile apps) for a maximum of 40 licensed sportsbooks.
Most licensees for now, however, are only partnered with one operator.
Another sportsbook is expected to open sometime later this year under the direction of the Louisiana Lottery Corporation, bringing as many as 41 sportsbooks to the Bayou State.
Sports betting in Louisiana is legal within 55 of 64 parishes where statewide voters approved legalization by referendum in Nov. 2020. Retail sports betting went live in Nov. 2021, with mobile launching in Jan. 2022.