With the vote to legalize sports betting in 55 of 64 parishes in Louisiana and enabling legislation in place, optimism around the state’s sports betting industry is at its highest point to date.
New statutes allow for up to 41 online betting apps, retail sportsbooks at as many as 20 gaming properties, and self-service kiosks at potentially thousands of disparate types of businesses in the appropriate parishes.
In addition, the state has a robust sports presence, a decent population, and proximity to other states without legal wagering channels. All of that adds up to a competitive and significant market for sports betting in the future.
Leaders in the state hope to have brick-and-mortar sportsbooks open by fall 2021 with online apps launching later in the year if not by early 2022.
How big can Louisiana sports betting be?
Expert projections have the value of the sports betting industry in Louisiana at over $2.5 billion in annual wagering when the market hits maturity. To understand the impact of that on local parishes, the state, and sportsbook operators, it’s necessary to understand a few key terms.
- Handle: This is how much money a sportsbook handles, hence the name. Another way to state it is how much all bettors over a period of time wagered.
- Gross gaming revenue (GGR): This is all the money that a gambling licensee takes in from players from all forms of gaming minus winners’ payouts. The gross term means the casino/racetrack/sportsbook hasn’t paid any expenses or taxes out of the funds.
- Hold percentage: This is the ratio of gross gaming revenue to handle. So, for example, if a sportsbook’s handle was $100 million. The sportsbook paid out $93 million in winnings, leaving $7 million in GGR. The ratio of GGR to handle is 7%, which is what is the hold for the sportsbook.
- Tax revenue: This is the amount of money a governing body receives from sportsbooks in accordance with laws/regulations. This does not include any licensing fees. Usually, governments set a flat percentage rate for licensees to pay on their monthly gross gaming revenue. In LA, that rate is 10% on retail wagers and 15% for online bets.
The projection of $2.5 billion in the third full year of operation includes a total of $200 million in gross gaming revenue across all operators. At the specified rates, that could produce up to $30 million in annual tax revenue spread among the 55 parishes and the state. The $200 million in gross gaming revenue would represent a hold percentage of 10%.
Licensing fees for Louisiana sports betting
State law lays out three different types of sports betting licenses. All three contain different responsibilities and privileges. Accordingly, they come with different fees as well. The disparate types have their own eligibility requirements, too.
|Type of License||License Fees||Who is Eligible?|
|Advance deposit wagering operator||$250,000 to apply; $500,000 for five-year period||Any entity eligible for a Class III or Class II license in LA or that already has such licensure (think land-based and riverboat casinos, racetracks)|
|Platform provider||$100,000 to apply; $50,000 for five-year period||Sportsbook operators (e.g., DraftKings, FanDuel) that don't already have a Class III or Class II gaming license in LA or otherwise wouldn't qualify for one|
|Service provider||$50,000 to apply; $25,000 for five-year period||Smaller businesses that have active agreements with the Louisiana Lottery and other sportsbook vendors like data providers and financial service providers|
The law allows for 20 advance deposit wagering operator licenses. If the currently eligible parties don’t apply for the entire sum by January 1, 2022, then daily fantasy sports operators and video poker establishments in the state can apply for any remaining licenses.’
Given that the state contains 15 riverboat casinos, four racinos, and land-based casino Harrah’s New Orleans, it’s likely that all 20 licenses will be occupied.
Could LA sports betting live up to projections?
The potential of Louisiana sports betting is big because it doesn’t have to rely on only its population.
Upon launch of online sportsbooks in LA, it will be the most accessible and open market among its neighbors. Arkansas and Mississippi only offer retail wagering, while Texas has no legal sports betting of any kind. That means citizens of those states could flock to Louisiana parishes to place legal wagers.
Tourism to New Orleans will also provide a great boost to the sports betting market. New Orleans is a frequently used site for several major sporting events like NCAA Division I basketball tournament games, college football bowl and playoff games, and the Super Bowl. In addition, New Orleans is home to franchises in both the NBA and NFL.
Expanding the view into the state as a whole, LSU enjoys an enormous amount of popularity across the state, an annual college football contender for the SEC and College Football Playoff championships. In total, Louisiana is home to five Football Bowl Subdivision and 12 Division-I basketball programs.
Those schools are most popular among residents of Louisiana, which boasts a population of over 4.6 million. The vast majority live in one of the 55 permissible parishes for sports betting.
Even for those who reside in any of the nine parishes of dissent, a quick trip across the parish border can allow them to place legal bets on their phones.