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Fiona Simmons June 19, 2020 3 min read
Louisiana Votes $83m Casino Tax Break to Help the Industry Cope
A new Senate Bill, SB 5, will help Louisiana’s gaming industry cope with the blow dealt by the pandemic, tanking revenue by $122 million as of May.
Louisiana Senate Passes Law to Help Casino Industry Overcome Pandemic
The Louisiana Senate Revenue and Fiscal Affairs committee has decided to proceed with a planned five-year tax break for the state’s casinos, which will see as much as $83 million written off over the next half a decade. Lawmakers have explained that the move comes after casino results slumped in the previous three months due to the COVID-19 outbreak.
Senate Bill 5 should allow each casino to offer up $5 million in free bets and play offers without having to pay any state taxes on those amounts. However, for any amounts exceeding the $5 million thresholds, the standard tax of 21.5% will apply.
Lawmakers have accounted for the potential further loss from tax revenue, projecting $11.2 million dip in the state coffers in the next fiscal year, starting on July 1. However, that was deemed the best way to help casinos, an important pillar of the local economy, continue to exist.
At the same time, Louisiana will probably suspend funding higher education to the tune of $21 million to help it balance the upcoming budget.
Play Wagers Get a Tax Break, But How Much?
That is at least the second attempt pitched to the Louisiana Senate to slash the taxes on all promotional offers, and specifically “promotional play wagers,” which allow players to play for free and then keep any winnings up to a point, while returning the original play amount.
The idea of the wagers is to get customers involved who then often make ancillary purchases at the bar or deposit more to spend at the facilities.
However, by this estimate, the state would have lost $29 millions in revenue from the gaming industry in just next following year and then $217.9 million over the five years after.
According to State Police reports, at least 10% of all gaming operator revenue in 2019 came from play wagers, or estimated $251 million. Republican Sen. Ronnie Johns said that Senate Bill 5 is a direct response to preserving a vital component of the local economy and assisting employees.
Senator Karen Carter Peterson, though, has cautioned that gambling is not only about positive experiences, outlining her own recovery from gambling addiction and the costs that the industry incurs in human well-being. She cautioned that while she had the financial means to do what’s right by herself, many people were too poor to get adequate treatment.
“I can take care of myself, but there are so many people, because of poverty, that can’t afford to take care of themselves.”
She further insisted that lawmakers should also work out plans for those vulnerable individuals who cannot support themselves in the face of gambling addiction and extend relief and services to help vulnerable individuals overcome this disease, as Peterson put it.
Johns argued that the gaming industry in the state gives employment to 20,000 people, including state lottery as well as other gaming venues available at oil and gas stations. He cautioned that however lawmakers felt about the gaming industry, it has been an important source of revenue for “many, many years.”
He further added that the pandemic has caused a severe blow on the industry, tanking gaming revenue by $122 million year-over-year. All of that needed to be addressed.