Lawmakers in North Carolina have officially approved an increase in the online sports betting tax rate from 18% to 23%. This adjustment will position the state among the higher-tax regions for sportsbooks in the United States, effective from the start of the new fiscal year on July 1.
State Senator Jim Burgin confirmed the decision after extensive negotiations regarding the tax rate for operators. Initially, lawmakers considered a range of rates between 20% and 30%, with earlier discussions even suggesting rates as high as 36% and 50%.
This new tax rate surpasses New Jersey's rate of 19.75% and the 20% rates seen in Massachusetts and Ohio. However, it still remains lower than Pennsylvania's hefty 36% tax, as well as the rates in New York, New Hampshire, and Rhode Island, where operators are required to share 51% of their revenue with the state. Delaware has a 50% tax rate, while Illinois employs a progressive tax structure ranging from 20% to 40%.
The decision to raise the tax rate comes after a prolonged debate among lawmakers, despite pushback from sports betting operators and industry advocates who argued that increased taxes could diminish customer incentives and harm the competitiveness of the regulated market.
North Carolina House Speaker Destin Hall mentioned that lawmakers aimed to align the state's tax rate with broader industry standards. He stated, “We want to be on the average of what other states are doing on a lot of these rates.”
Hall also expressed caution about making significant changes to a market that has been performing well since its inception. “We’re somewhat hesitant to tweak too much a program that’s worked pretty well for the state,” he noted.
Online sports betting was introduced in North Carolina in March 2024, generating over $1.6 billion in operator revenue, with the state collecting nearly $300 million in taxes at the previous 18% rate.
During the 2025/26 fiscal year, North Carolina collected approximately $133 million in sportsbook taxes. At the newly approved 23% rate, the tax revenue for that period would have reached about $170 million, yielding an additional $37 million.
The Sports Betting Alliance and its member operators have urged residents to oppose the tax increase, warning that it could lead to reduced promotions and incentives for customers.
FanDuel communicated to its customers that legal sports betting is vital in funding collegiate athletics throughout the state, stating, “A tax hike would threaten that funding and hit fans.”
Industry experts have cautioned that higher taxes might make offshore sportsbooks more appealing to some bettors if licensed operators cut back on promotions or adjust their pricing to counterbalance the increased tax burden.