North Carolina lawmakers are looking to double the tax rate on the state’s eight online sports betting operators.
Key Takeaways
- North Carolina’s tax rate would go from 18% to 36%, beginning Oct. 1, if approved.
- The Tar Heel State would be tied with Pennsylvania for the third-highest rate among jurisdictions with multiple operators.
- N.C. sports betting has produced more than $135 million in 13 months since launch.
Assembled by Republicans, the North Carolina Senate released a two-year state budget proposal on Monday. SB 257 calls for the rate sportsbooks pay out to the Tar Heel State to increase from 18% to 36%. This would put North Carolina sports betting in a tie for the third-highest tax rate in the U.S. among jurisdictions with multiple operators.
New York leads the nation with a 51% tax rate while Illinois uses a progressive rate that starts at 20% and rises to as high a 40%. North Carolina’s proposed rate would be on par with Pennsylvania’s 36%.
The Appropriations/Base Budget, Finance, and the Pensions and Retirement and Aging committees all approved the budget on Tuesday. The Senate is expected to finalize the budget by Thursday and send it to the House for amendments and approval.
Adding funding
SB 257 is a $32-$33-billion budget proposal that, if approved, will go into effect Oct. 1. North Carolina is reportedly facing a budget deficit that could begin as early as 2026. Increasing the sports betting operator tax rate is expected to help that and send even more funding to the state’s public university athletic departments.
Currently, 13 schools in the UNC system receive $300,000 and 20% of the remaining proceeds. The new budget would increase the amounts, which would no longer be equal. Schools would receive between $500,000 and $1.5 million based on tiers, as well as splitting the remaining 20% of proceeds.
The budget also calls to add the University of North Carolina and NC State to the list. Should they meet requirements to schedule other in-system opponents in men’s and women’s basketball to impact the state economically, the two schools would split more than $55 million over the next two years to help with the upcoming revenue share model used to pay student-athletes.
Taxing operators
N.C.’s current 18% tax rate has generated more than $135 million and exceeded projections since online wagering launched in March 2024. The state has received an average of $10.4 million per month. Operators have won nearly $752 million in gross revenue from more than $7.2 billion since North Carolina sports betting began.
FanDuel, DraftKings, BetMGM, Caesars, ESPN BET, Underdog, Fanatics Sportsbook, and bet365 are the Tar Heel State’s licensed operators. Retail sports betting has not launched yet, and horse racing is expected to be added at some point as well.
North Carolina joins a list of other states looking to get more out of operators. Ohio lawmakers wanted to double the rate to 40%, but that attempt was removed from consideration in the Buckeye State.
Maryland Gov. Wes Moore proposed a raise from 15% to 30% in the latest budget to help fight a $3 billion deficit, while lawmakers have called for a hike to 20% on sports betting. New Jersey also wants to increase its sports betting tax rate from 13% to 25%.
