A consultant Gov. John Bel Edwards’ administration hired says Louisiana needs to relocate two casinos, lower taxes on gambling and legalize sports betting in order to compete with Mississippi.
Spectrum Gaming Group issued a 260-page report on the state of Louisiana’s gambling industry for the Louisiana Economic Development agency April 2. The Times-Picayune | NOLA.com obtained a copy Tuesday (April 9) before it was publicly released. The report surfaces just as the Louisiana Legislature is set to consider new gambling laws and tax structures in its lawmaking session that started Monday.
Spectrum said Louisiana casinos are at a distinct disadvantage to those in Mississippi, which taxes its gambling facilities at a much lower rate. A casino in the Bay St. Louis area pays an 11.6% tax rate, compared with 26% in Louisiana.
Corporations that own casinos in Mississippi and Louisiana have an incentive to upgrade facilities in Mississippi and market them to Louisiana residents because of the favorable tax structure, the report concludes.
The New Orleans market loses more than $255 million to Mississippi, according to Spectrum.
Seven states, including Mississippi, have legalized sports betting since the U.S. Supreme Court allowed its expansion beyond Nevada last year. If approved in Louisiana, sports betting could generate between $35 million and $50 million annually in state taxes, the consultant said.
Sports betting could help bring younger patrons intro Louisiana casinos, Spectrum claims. Such facilities see a 10% to 15% percent boost in food and beverage sales during major sporting events, according to the report.
Spectrum recommends Louisiana legalize sports betting not just in casinos, but also online in order to make a dent in illegal wagering. The consultant also suggests the tax on sports betting be no more than 15%.
The sports betting bill with the most support in the Legislature would limit wagering to Louisiana’s 20 casinos and racetracks with slot machines. Betting on college sports games, which some states have banned, would be allowed under the proposal. It sets a 12 percent tax rate.
The consultants recommend two riverboat casinos in Shreveport-Bossier City be moved, one to North Shore and another to northeast Louisiana, where there are no large facilities devoted to gambling.
The relocations would help prevent “leakage” from Louisiana to Mississippi casinos, Spectrum said. Most casino customers are only willing to drive about two hours to gamble, according to the analysis, and the casinos that remain in northwest Louisiana would see a boost because the market wouldn’t be as crowded. Seven casinos currently operate in Caddo and Bossier parishes.
Last year, a bill to allow a Shreveport-area riverboat to move to Tangipahoa Parish failed in the Legislature.
Louisiana currently taxes gambling vouchers and promotional deals casinos give out to regular patrons. Mississippi does not tax this activity, which gives its casinos a “substantial marketing advantage” over Louisiana, according to Spectrum.
The consultants also noted that the Louisiana Lottery cannot reinvest in its games because it has to pay too much of its gross revenue, 35%, to the state. This restricts the type of games the lottery can offer, they said, adding that Mississippi does not have such restrictions.
With little to no gross revenue transferred to the state, the Louisiana Lottery could double ticket sales within five years and generate $30 million more dollars for the state, the report said.
Spectrum’s report also said smoking restrictions have contributed to the stagnation of the gambling industry in Louisiana. Harrah’s Casino in New Orleans was included in a smoking ban enacted in April 2015. A bill to eliminate smoking at all Louisiana casinos failed last year in the Legislature.
Casinos are also struggling with a “shift in population,” as younger people are less likely to go a casino to gamble than older people, according to the report.
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