Louisiana Prop Bet Debate Exposes a Complex Problem

The small story out of the Bayou State is catching the eye of responsible gambling advocates.

Lawmakers in Louisiana have decided to abandon SB 354, which proposed a ban on prop bets. While it received initial support, that quickly changed after a fiscal note revealed the ban would cost the state almost $30 million in tax revenue.

The bill’s early supporters quickly changed their tune after seeing the money the state would lose. While they acknowledge the bill's good intentions, they believe the drop in tax revenue could lead to even worse outcomes.

While the debate was focused on the Louisiana market, it shows a critical problem currently facing the US sports betting industry.

Prop Bets Linked to Addiction, Harassment, Integrity Issues

Prop bets have been a part of sports betting for decades, but they have become a hotter topic since the expansion of mobile gambling. 

Several studies have linked prop bets to problem gambling, with bettors placing those wagers far more actively than those who don’t. The wide availability means losing bettors have more chances to “break even,” but often end up losing even more.

Player prop bets have also been linked to a spike in the harassment of athletes. This includes college athletes, leading NCAA President Charlie Baker to push for more regulations. 

Niche types of prop bets have entered the national spotlight in a negative way over the last two years. They have been used in betting schemes involving pro and college athletes, causing serious concerns over the integrity of America’s favorite sports.

Prop Bets Drive Revenue for Sportsbooks

The fiscal note in Louisiana shows something that many inside the sports betting industry already know: prop bets keep sportsbooks afloat.

By offering prop bets, sportsbooks can accept far more wagers than the standard moneyline, spread, and total bet types. This gives bettors several ways to wager on any single game, which many fans enjoy. 

This bet type is also ideal for parlays, especially ones involving a single game. While these bets offer larger payouts, they require the bettors to win several “legs.” This leads them to lose at a far higher rate than standard bets, padding the bottom line of every mobile sportsbook.

Lawmakers Face Tough Choice

To the casual reader, it may be easy to blame lawmakers for choosing to protect the tax revenue over the health of their constituents. However, the choice they are actually facing is far more complicated.

To legalize sports betting, lawmakers across the US ensured that the tax revenue generated would go to critical programs. Many states earmark the majority of revenue for schools, public projects, tax relief, and other important causes. The popularity of sports betting led to those programs seeing a massive spike in funding, which they now plan on each year.

If a state bans prop bets, it means those programs would see massive cuts. While some markets can afford it, others can’t.

One great example comes from Colorado, where tax revenue from sports betting funds freshwater projects. With drought and ravaging wildfires expected this summer, lawmakers can’t afford to give up those funds. As much damage as prop bets may be doing, the danger of losing the tax revenue they generate could be even worse.