Louisiana legislators to consider college athletics subsidies

The Louisiana Legislature is considering several proposals that would create tax breaks and new revenue streams for college athletes and their sports programs. 

If passed in their current state, the proposals would exempt college athletes from income taxes on their name, image and likeness (NIL) deals and would create a new fund to give public dollars to NCAA Division I athletics programs like LSU’s. 

But critics say the Republican-backed proposals are doing something antithetical to their party’s free-market philosophy. They also argue the bills could further widen the divide — cultural and fiscal — between academics and athletics.

‘The need is so high’

House Bill 639 by Rep. Neil Riser, R-Columbia, would increase the tax on sports gambling from 15% to 32.5%, aligning it with the tax on video poker machine wagers. Increasing the tax rate on sports gambling has support from both conservative and progressive corners, both of whom want to use the revenue to offset the “social ills” of gambling.

But Riser’s bill goes further, altering the revenue split and putting 25% into a fund that would benefit student-athletes at public schools that compete at the NCAA Division I Football Bowl Subdivision and Football Championship Subdivision levels. That includes UL Lafayette, UL Monroe, Louisiana Tech, LSU, Grambling, McNeese, Nicholls, Northwestern, Southeastern and Southern. 

The University of New Orleans, which does not have a football program, would be left in the cold. 

“The need is so high,” Riser said in an interview with the Louisiana Illuminator and Tiger Rag. “When you start talking about the SEC, talking about any level of athletics right now, it’s changed so dramatically.” 

“Even like ULM … just to be competitive [in recruiting], it takes facilities, when you’re dealing with [athletes] they require you to have all those things,” Riser said. 

A frequent adage about LSU athletics is that it doesn’t get any state funding, which isn’t strictly true. The department notably received $1 million in cash from the state in 2023 to plan for improving or replacing the Pete Marravich Assembly Center and occasionally receives small-dollar amounts for various state-funded projects. 

But Riser’s fund could change that. The state currently brings in approximately $54 million annually in sports gambling revenue. If his bill passes, the state’s take would increase to approximately $116 million, with about $30 million dedicated to college athletics. 

That’s a huge amount of money in the context of college athletics in Louisiana. Only LSU has a budget larger than that, with most other FBS and FCS schools in Louisiana bringing in only half or a third as much. 

Even with heavy subsidies to small programs like Nicholls and Grambling, you can expect LSU to line up to receive its share of the revenue. 

Presently, the state’s split for sports gambling tax revenue calls for 25% to go toward early childhood education, 10% to local governments, 3% to gambling addiction programs, and the rest to other priorities and the state general fund. Under Riser’s bill, an additional 25% would go to college athletics and 3% to the Louisiana Postsecondary Inclusive Education Fund, which finances programs for students with disabilities, before the rest goes into the state general fund that can be used for a variety of government needs. 

“Legalized mobile gambling has created or exacerbated many social and cultural problems, including addiction, bankruptcies, and even increases in domestic violence,” said Peter Robins-Brown, executive director of the progressive organization Louisiana Progress. “New tax revenue should be used first and foremost to address some of those problems before we talk about spending more money on college sports.” 

And dedicating state money to college athletics might be a hard sell at a time when lawmakers are digging into couch cushions to find the change necessary to prevent a K-12 teacher pay cut. 

NIL tax breaks

Two pending bills would exempt athletes’ NIL compensation from state income tax. 

The most notable proposal is House Bill 166 by Rep. Dixon McMakin, R-Baton Rouge, which would exempt the entirety of athletes’ NIL income from the state taxes. McMakin, an LSU alum whose father played baseball for the Tigers in the 1970s, said he proposed the legislation because LSU is competing for athletes against states like Texas that don’t have a state income tax. 

McMakin said the measure is appropriate in light of the economic impact athletes have on the state. LSU athletics generated $500 million for the state in the 2021-22 academic year, according to a university study. 

But what might be considered the academic parallel to paid student-athletes — graduate assistants — would still be subject to state income tax. 

Several graduate students interviewed raised objections to this double standard, which Jan Moller, executive director of Invest in Louisiana, said is a valid concern. His organization advocates for policies that benefit lower- and middle-class citizens. 

LSU covers tuition for graduate assistants and pays them a stipend for the work they do, such as teaching freshman classes and conducting research. Unlike student-athletes, grad assistants have to pay for their own housing, meals and health care on their meager stipends – expenses that are all paid for college athletes on full scholarships. 

“They are subsidizing entertainment over academics at the expense of academics,” said biology graduate student Cullen Hodges. 

“It’s not the government’s role to subsidize millionaire college athletes when we can’t provide basic services to our citizens,” Moller said. 

McMakin said if graduate assistants wanted to present evidence of their economic impact, he’ll “happily” add them to his bill. In 2022, LSU research, much of it done or assisted by graduate students, had a $1.3 billion economic impact. 

The proposal is bad tax policy, Moller said. 

“It’s conservatives who will always say that we shouldn’t pick winners and losers with our tax policy,” Moller said. “What is this if not picking winners and losers?” 

A second proposal, House Bill 168 by Rep. Rashid Young, D-Homer, would exempt the first $12,500 of athletes’ NIL income from state taxes. That aligns the exemption with the standardized deduction offered to every other Louisiana resident. It’s not clear if this legislation is necessary for the athletes to receive the deduction, but Young said he wanted to make sure they get it. 

Young, a former Grambling football player, said he also supports McMakin’s bill. 

“Top athletes are leaving the state of Louisiana because they’re getting better deals in other states that … don’t have any income tax,” Young said in an interview. “We need to start trying to get in the game.” 

Young’s bill also creates an income tax deduction for taxpayers who enter into NIL deals with college athletes. It was designed to encourage small businesses to get in the name, image and likeness game, he said 

Young has also proposed a resolution that would create a task force to study the need for increased transparency on NIL and related issues. LSU Athletic Director Scott Woodward, and other Division I athletic directors in Louisiana, would be members of the task force, as well as student-athletes, state legislators and three representatives of the private sector. 

Other athletics proposals

Sen. Jeremy Stine, R-Lake Charles, wants to “Make American Athletics Great Again.” His proposed Senate Bill 200 would prohibit athletic departments in Louisiana from giving more than 25% of their scholarships and financial assistance to international athletes. 

About 23% of LSU’s scholarship athletes are international students, according to data LSU athletics spokesman Zach Greenwell provided. 

Just three schools — McNeese, ULM and UNO — are above the proposed 25% rate. Stine’s bill does not address what would happen to these athletes. He did not respond to an interview request for this report. 

House Concurrent Resolution 13 by Rep. John Illg, R-River Ridge, calls on the Southeastern Conference to schedule LSU home games in September after 6 p.m. to account for the intense heat. Illg’s resolution only mentions LSU, ignoring the other football programs in Louisiana that also compete in the heat. 

Correction: This story has been updated to reflect the accurate split of revenue for sports wagering taxes under Riser’s bill.