North Carolina lawmakers are finally on the verge of increasing the tax rate on the state’s seven online sports betting operators.
Key Takeaways
- North Carolina legislators want a rate between 20% and 30%.
- That would generate significant revenue in a state that’s hauled in over $287 million since March 2024.
- A per-wager tax appears to be on the back burner.
Legislators reached an agreement to raise the rate from 18% to between 20% and 30%, according to a WRAL report on Sunday. Citing sources, the media outlet said negotiations are still ongoing, and the figures could be altered based on pushback from operators and other factors.
The Tar Heel State has generated over $287 million in tax revenue all-time, but lawmakers are looking for more North Carolina revenue. Discussions of altering the rate this year took off in May, and this would be the first time the operator tax has been raised since sports wagering launched in March 2024.
“I think, on our side of the building, it’s more so looking at, ‘How do we line up with other states?’ We want to be on the average of what other states are doing on a lot of these rates,” House Speaker Destin Hall told WRAL.
“A lot of the ideas are out there. I think we’re somewhat hesitant to tweak too much a program that’s worked pretty well for the state, all things considered.”
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Raising revenue
The Tar Heel State's current tax rate is fairly middling. N.C., which doesn’t have retail sportsbooks, ranks among the top 10 in terms of year-to-date sports betting handle, and its tax rate is lower than other states on that list, like New York (51%), Pennsylvania (34%), Ohio (20%), and Illinois, which uses a progressive tax system that ranges from 20% to 40%.
Legislators flirted with increasing it before approving the 2025/2026 state budget. The Senate tried to add a 36% tax rate last summer, but the House chose not to approve a hike.
This year, lawmakers have also tossed around the idea of adding a per-wager tax, which drew the ire of online sports betting operators in Illinois after the Prairie State began charging 25 cents per bet on the first 20 million and 50 cents thereafter in 2025.
The per-wager tax generated nearly $11 million in March for Illinois. North Carolina lawmakers don’t appear to be set on adding that kind of surcharge just yet and are hopeful a higher overall rate will produce the increase the state desires, according to WRAL. Legislators have also floated a lottery sales tax, but that appears unlikely.
Facing opposition
Any sports betting hike is being opposed by the Sports Betting Alliance, which is made up of North Carolina operators FanDuel, DraftKings, Fanatics, bet365, and BetMGM. The group released a marketing campaign in May, warning customers that an increased tax rate would make wagering more expensive to bettors, lead to fewer promotional bets, and harm the ecosystem.
“Legal sports betting is generating real revenue for collegiate athletic departments across the state,” FanDuel said to customers in an electronic letter. “A tax hike would threaten that funding and hit fans like me directly.”
North Carolinians have wagered over $15 billion since March 2024, and the basketball-centric state bet more than $1.3 billion during March and April, which included conference and NCAA tournaments.
The seven online operators, which also include Caesars and theScore Bet, have made $1.6 billion in gross revenue over the last two years.
