Louisiana approved a new law that raises the tax on online sports betting from 15 percent to 21.5 percent. The change came through Act 298, which directs one quarter of the new revenue to public college athletic departments. This approach links the growth of sports betting to the financial needs of college sports at a time when the landscape is shifting because athletes can now earn money from their name, image and likeness.

Why Louisiana Needed the Extra Revenue

The increase did not happen in a vacuum. In late 2024, state leaders approved a major tax overhaul that lowered corporate and personal income taxes and raised the sales tax. This created revenue gaps that the state needed to fill. Sports betting offered a solution. Louisiana officials cited a familiar political approach in the state. When raising taxes becomes difficult, leaders often turn to industries that are already heavily regulated and profitable.

Interest From Other States

College athletic leaders around the country have been paying close attention. Since the law passed, administrators from dozens of schools have contacted Louisiana officials to learn how the model works. Many states in the South and Midwest have legalized sports betting with relatively low tax rates. These states also have some of the most passionate college sports cultures. The Louisiana example could influence future legislation that ties betting revenue to athletic funding.

Concerns From Critics

Not everyone supports the plan. Louisiana faces projected budget shortfalls and relies heavily on federal dollars for health care, disaster response and poverty relief. Critics argue that dedicating so much betting revenue to college sports sends the wrong message when the state is struggling to meet other needs. The bill also continues to allocate only three percent of sports betting revenue to problem gambling programs, even as betting expands rapidly.

Louisiana’s Broader Budget Context

More than half of Louisiana’s revenue comes from the federal government. Medicaid expansion, disaster relief funds and emergency programs have driven this trend. While the state’s overall budget has grown quickly, the general fund that supports core state services has not kept pace with inflation. Budget experts note that Louisiana has managed its direct tax funded spending cautiously and that most of the recent growth has been tied to federal health care dollars.

The Pressure on State Budgets

The financial picture for states is changing. Recent federal policy shifts will require states to carry more responsibility for programs like health care and food assistance. New work requirements in Medicaid, limits on provider taxes and increased state obligations for SNAP benefits will all create cost pressures. States may also face higher spending needs as more uninsured residents seek care due to changes in federal coverage rules.

Why States Will Need More Revenue Tools

Analysts believe states will need to prioritize revenue creation in the coming years. Without stronger revenue strategies, states may be forced to cut education, infrastructure and public services. Ideas being discussed include updated personal income tax brackets, efforts to reduce corporate tax avoidance, new taxes targeting high wealth households and reforms that make property and sales taxes more aligned with ability to pay.

Vacancy Taxes as a Supplement

Some cities have explored vacancy taxes on unused residential or commercial properties. These taxes can encourage owners to put properties back into productive use. So far, results show only modest improvements in housing availability. Vacancy taxes alone are not a solution but can play a small part in broader efforts to improve land use and local revenue.