Brick-and-mortar limits tax potential
Last Tuesday, the attention of the world was on the U.S. presidential race (and still is, frankly), but in addition to president and other legislative races, residents of six states had the opportunity to cast their votes for or against gambling expansion measures. One such state was Louisiana, which saw 55 of the state’s 64 parishes approve legalizing sports betting. All of the rules and regulations will come in due course, but there is one thing that still needs to be decided by state lawmakers: will mobile betting be allowed?
The fiscal note attached to the bill that permitted the November 3 vote said that “total tax receipts the state might expect to eventually receive are relatively small.”
It cited neighboring Mississippi, which only raised $3.5 million in taxes from sports betting last year. Thus, it seems like the legislation assumed that sports betting would only be permitted at one of the state’s nearly 30 casinos (or at least whichever ones end up housing licensed sportsbooks).
And while a few million bucks in the state’s coffers is great, permitting mobile betting and betting on the computer could significantly boost those numbers.
“Everybody that knows the industry knows that if you don’t do mobile, it is not going to be much money,” House Speaker Pro Tem Tanner Magee told The Advocate. “If you do mobile, it is.”
Mobile raises the ceiling significantly
The Advocate points to New Jersey as a model. The state has had legal sports betting, both mobile and brick-and-mortar, for over two years and has brought in $80 million taxes. It also generated $668 million in handle (total wagers) in August, the most of any state ever.
Now, New Jersey and Louisiana are not exactly comparable, as New Jersey has four million more residents and the median household income is much higher than in Louisiana, but the point is that a full 80 percent of its sports betting revenue comes from mobile.
Opponents of mobile betting naturally don’t want a sportsbook in everyone’s pocket, something they think will cause a rise in problem gambling. And that’s not an unreasonable thought. Some opponents also, however, believe that banning mobile betting will help casino foot traffic, as bettors will have to make the trip to a land-based casino.
And yes, that may happen. But it is possible it might not. There will always be those with a strong desire to place a sports bet who will be willing to hop in their cars and go to a sportsbook, but will enough people do that to make a difference?
The same thing was thought with online poker, that it would take away business from casinos. But that wasn’t the case. In fact, many people who started playing poker online became interested in trying it in person, so they visited a casino. That could happen with sports betting.
The bottom line is we don’t know for sure. But what is quite certain is that without mobile betting, the tax revenue from sports betting will be minimal.
“If lawmakers have a proper sense of urgency and keep the timeline within 12 months to 15 months and you are ready to launch by 2022 you have done a good job,” Wade Duty, executive director of the Casino Association of Louisiana, told The Advocate. “And if you get the mobile component you have done a better job.”