North Carolina Lawmakers Deadlocked Over Sports Betting Tax Hike

The North Carolina House and Senate have differing versions of the state’s budget, with the upper chamber doubling the tax on NC sports betting revenue while the lower chamber makes no mention of an increase.

Conflicting Opinions

The North Carolina Senate approved a proposed two-year, $65 billion budget last month by a 30-15 vote. The Senate budget also increases the sports betting tax from 18% to 36%, which is a tactic many other states have employed during this legislative session to generate more revenue.

However, the North Carolina House has had its own budget talks and announced its proposal earlier this week, which did not include any tax increase on the sportsbooks’ revenues. Yet, it does stipulate how the revenue earned from the sports betting tax should be divided and also adds the University of North Carolina and North Carolina State to the 13 other UNC System schools that receive money from the tax on sports betting operators.

The revenue gained from sports betting will be divided as follows:

• $1 million to schools competing in Division I that do not participate in football
• $300,000 to each university that participates in Division II
• $3 million to the North Carolina Youth Outdoor Engagement Commission
• $10 million to the North Carolina Major Events, Games and Attractions Fund
• Additional revenue will send 20% to the universities and 50% to schools participating in Division I football, with the rest going to the state’s general fund.

The Senate version also includes UNC and NC State, but the two teams must play a certain number of basketball games against the other schools in the North Carolina school system to avail themselves of the additional revenue.

The budget will now go to a committee, where the lawmakers will decide if the increase is to be implemented. The increased rate would take effect in October of this year.

Sportsbooks Push Back

Naturally, sports betting operators in North Carolina are none too pleased with the possibility of paying double in taxes to the state. But other watchdog groups are also interested in the results of this legislative showdown between the two chambers.

Grover Norquist, president of Americans for Tax Reform, recently shared his opinion in a letter to the Senate, stating, “While this tax hike is targeted on a politically unsympathetic and convenient target, we’ve seen cautionary tales play out in other states that took a similar confiscatory approach to gaming taxation.”

The Sports Betting Alliance (SBA), a gaming industry trade group funded by BetMGM, DraftKings, FanDuel, and Fanatics, also railed against the proposed tax. On its website, it talks about the deleterious effects on consumers that an increased sports betting tax will have.

The SBA website lists the following:

• More taxes mean worse odds and access to fewer promotions and bonuses.
• Sports betting tax revenue ALREADY generates millions each year for North Carolina. But a 100% increase? That could drive players to the illegal market, putting those funds and consumer protections at risk.
• Raising taxes on hardworking North Carolinians and the games they love is NOT the Carolina way!

Sports betting in North Carolina launched in March 2024, and in the subsequent 13 months, the sportsbooks have handled $7.82 billion in wagers, which has generated revenue of $799 million, of which $136 million has gone to the state in the form of taxes.