North Carolina May Double Tax on Sports Betting
Over the last few years, things have been going well for sports betting in North Carolina. In June 2023, the state presented its initial schedule to roll out legal sports betting.
LISTEN TO THIS ARTICLE:In March 2024, the state officially launched online betting with an 18% tax on gross betting revenue after payouts to bettors were deducted.
However, now, Republican lawmakers in the Senate are proposing a major change, doubling the tax rate to 36%. If approved, it would have a major impact on North Carolina’s sports betting environment.
Such an increase would push North Carolina into the upper tier of sports betting tax rates nationally. It would join states like Pennsylvania (36%), Illinois (up to 40%), Delaware (50%), and New York and New Hampshire (both at 51%).
College Sports Programs Poised to Benefit
The proposed increase is expected to face resistance from leading industry operators, such as DraftKings and FanDuel. However, with Republicans holding a firm majority in the state Senate, those in favor are optimistic about the proposal passing as part of the upcoming two-year budget.
The financial stakes are considerable. Since online betting began, operators have already contributed over $135 million in taxes. A 36% tax rate would sharply boost that figure. Legislators plan to allocate a large share of the revenue to support athletic programs across public universities in the state.
One surprising element in the proposed budget is a mandate for both UNC-Chapel Hill and NC State to schedule men’s and women’s basketball games against fellow UNC System schools. The intention is to distribute attention and resources more equitably across the entire system.
Under the new funding model, UNC and NC State, currently not part of the existing athletic funding program, would receive $24.4 million starting in the fiscal year beginning July 1, and $31 million the following fiscal year.
At present, 13 universities in the UNC System benefit from the program, each receiving $300,000 plus 20% of remaining tax revenue after base allocations. If the budget is approved, those schools would instead see funding ranging between $500,000 and $1.5 million.
Related: North Carolina Bill Allows Gamblers to Deduct Losses from State Taxes
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Building on Early Success
Senate leader Phil Berger, a Republican from Rockingham County, said that the proposal is a result of the early success of the sports betting program. He noted that its success has already benefited several university campuses, and lawmakers are eager to extend those gains more broadly.
If enacted, the change would mark a major evolution in how the state makes use of revenue from sports betting. Previous legislative efforts also sought to redirect betting income toward other causes. For instance, House Bill 384 aimed to use it to offset tax deductions for National Guard members. Senate Bill 657 proposed coach stipends, while Senate Bill 533 focused on funding gambling addiction prevention programs.
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