Louisiana State Treasurer John Schroder

Louisiana State Treasurer John Schroder listens to testimony at a meeting of the state Fiscal Review Committee on Jan. 29, 2020.

(The Center Square) – The Louisiana House of Representatives on Wednesday approved taxes on fantasy sports, sending the last piece needed to legalize the contests to the state Senate.

Meanwhile, on the other side of the building, senators failed to get the two-thirds majority votes needed to advance a proposed constitutional amendment that would have favored State Treasurer John Schroder in his fight with Gov. John Bel Edwards over how state government uses money that hasn’t been claimed by its rightful owner.

Fantasy sports players create fake teams with real players. Winners and losers typically are determined by a points system tied to individual performances, not by the outcome of real-world sporting events.

Playing fantasy sports already is legal in Louisiana if no money changes hands. But Louisiana residents who use sites like DraftKings and FanDuel that charge fees and award cash prizes could be subject to fines or jail time.

In 2018, voters in 47 of Louisiana’s 64 parishes approved legalizing fantasy sports with cash prizes in their areas. Last year, legislators tried to set up the regulations and tax rates, but former Sen. Danny Martiny, upset about the treatment of another bill, filibustered away the last moments of the session and blocked the effort.

Lawmakers approved fantasy sports regulations during the regular session that ended June 1 but could not approve a new tax during that non-fiscal session, so they added the tax proposal to the current special session’s agenda.

House Bill 64 by Rep. John Stefanski sets an 8 percent tax on fantasy sports revenue, which he said is in line with what other states charge. The money would be dedicated to early childhood education.

The Legislative Fiscal Office says fantasy sports taxes might bring in less than $400,000 annually. Actual revenue will depend on how many people participate.

Louisiana’s unclaimed property fund consists of abandoned financial assets such as old checking and savings accounts, unpaid wages, securities, life insurance payouts, uncashed checks, and the proceeds of safe deposit boxes. Historically, lawmakers have spent money left in the fund at the end of the fiscal year.

Last year, Schroder announced he would not turn over the money, saying state government is only a caretaker for the assets and has no right to spend it. His refusal prompted Edwards’ administration to file suit on the grounds that the legislature, not the treasurer, has the constitutional right to dictate spending.

Edwards won in district court, though Schroder is appealing. A potential constitutional amendment senators discussed Wednesday essentially would settle the issue in Schroder’s favor.

Under the terms of Senate Bill 12, unclaimed property would be held in a dedicated fund. State lawmakers would be banned from spending the principal, though they would be free to spend the interest.

“It’d be a double win for the state,” said Sen. Michael Fesi, a Houma Republican. “Doing the right thing is making sure we take care of the people’s money.”

The vote was 23-14 in favor, which was not enough to advance the bill because potential constitutional amendments require approval of two-thirds of the legislators in each house, along with a majority of voters. Five Republicans sided with the Democratic governor over the Republican treasurer, and two Republicans were absent.

Staff Reporter

David Jacobs is a Baton Rouge-based award-winning journalist who has written about government, politics, business and culture in Louisiana for almost 15 years. He joined The Center Square in 2018.