The North Carolina proposed budget that would double the sports betting tax rate on operators received final approval from the Senate on Thursday morning.
Key Takeaways
- The Republican-led budget proposal that includes increasing sports betting operator tax from 18% to 36% heads to the House, and an agreement by the two sides must be reached by July 1.
- Sports betting has thrived in North Carolina, producing $135 million in tax revenue from more than $7.2 billion in wagers.
- The proposed sports betting tax hike would go into effect on Oct. 1.
The legislature passed the two-year budget that’s expected to spend $32.6 billion in the next fiscal year and $33.3 billion during the following year. SB 257 outlines spending and includes sportsbooks going from an 18% monthly payout in the Tar Heel State to 36%, which would put North Carolina in a tie with Pennsylvania for the third-highest tax rate.
The Republican-led budget passed in the Senate by a vote of 35-15. No changes to the proposed sports betting tax increase were made before final approval.
Raising rates is not new. Illinois did it last year. New Jersey and Maryland have proposed sports betting tax hikes on the table. Other states, like Massachusetts and Ohio, have also explored getting more out of operators.
Looking ahead
North Carolina’s budget bill now heads to the House, where amendments and additions will likely be made during the rest of spring.
Both sides must come to a budget agreement by July 1, but there has been no public pushback yet from lawmakers on the sports betting tax hike that would go into effect on Oct. 1.
The additional revenue from sportsbooks is expected to help a rising budget deficit in North Carolina. Additional funds will also be disseminated to the Tar Heel State’s public university system, including UNC and NC State.
Surpassing expectations
A projection before wagering began estimated $100 million in tax revenue over five years. Since launching in March 2024, North Carolina sports betting has generated more than $135 million in tax revenue, far exceeding expectations and leading lawmakers to use the proposed hike to pay for other areas in the budget.
FanDuel, DraftKings, BetMGM, Caesars, ESPN BET, Underdog, Fanatics Sportsbook, and bet365 have combined to generate more than $7.2 billion in wagers over the last 13 months. Those operators have produced nearly $752 million in gross revenue.
