Lawmakers in North Carolina are deliberating a potential increase in the tax rate for sports betting as part of ongoing budget discussions, following unexpectedly high revenue since the launch of online wagering in March 2024.
Currently, the state imposes an 18% tax on gross wagering revenue from eight licensed sports betting operators. Since legalization, the market has produced over $287 million in tax revenue, exceeding initial estimates.
As reported by WRAL, legislators are considering raising the tax rate for operators. House budget writer Donny Lambeth confirmed that both chambers of the legislature have agreed to explore an increase, although specific details were not disclosed.
Sources familiar with the negotiations indicated that discussions have centered around a tax rate between 20% and 30%. More recently, it was suggested that lawmakers reached a tentative agreement on a figure closer to the lower end of that spectrum. These sources requested anonymity as they were not authorized to speak publicly about the negotiations.
The proposed changes are still subject to modification as lawmakers continue to refine the state's overall budget and gather input from industry stakeholders.
North Carolina's current sports betting tax rate is positioned between neighboring states and some of the highest-tax jurisdictions in the nation. Tennessee imposes a tax of 19.7% on sports betting revenue, while Virginia has a rate of 15%. In contrast, several states, including New York, enforce a hefty 51% tax.
Since the legalization of sports betting in March 2024, bettors in North Carolina have placed over $15.3 billion in wagers, including promotional and bonus bets.
House Speaker Destin Hall stated that lawmakers are assessing how the state’s tax structure compares to other jurisdictions while contemplating adjustments to a system that has proven lucrative.
“It’s been a tremendously successful policy in this state,” Hall remarked. “A lot of people apparently enjoy participating in this for various reasons. It has generated significant revenue for the state. We are looking at how we align with other states and want to be in line with the average rates. There are many ideas being discussed, but we are cautious about making significant changes to a program that has been effective for the state.”
Last year, the state Senate approved a budget proposal that would have increased the sports betting tax to 36%, while the House version maintained the existing 18% rate.
Lawmakers have also explored proposals for additional taxes on lottery sales and individual wagers, but these options may face operational difficulties and pushback from bettors. Many lawmakers view raising taxes on operators as a more straightforward solution.
The potential tax hike has already faced opposition from the sports betting industry. The Sports Betting Alliance, representing sportsbook operators, has initiated a campaign urging residents to contact their legislators regarding the proposed tax increases.
Operators argue that higher taxes could diminish the funds available for recipients of gambling-related revenue. They also warn that increased tax burdens might lead to less favorable odds, fewer promotional offers, and a greater inclination for consumers to turn to unregulated betting options.
“This tax hike will only penalize licensed, regulated companies that have contributed hundreds of millions in tax revenue to the state and the UNC System athletic departments,” the Sports Betting Alliance stated. “We urge state leaders to focus on enhancing the legal framework that protects players, supports jobs, and prevents illegal operators from entering North Carolina.”
The distribution of sports betting tax revenue is also a topic of current budget negotiations.
Thirteen universities within the University of North Carolina system that manage intercollegiate athletics programs have each received over $4.3 million from these funds.