North Carolina budget includes plan to double online sports betting tax rate
Proposal to hike rate from 18% to 36% has breezed through Senate committees, which would put the state among the heaviest taxed jurisdictions in the US
Lawmakers in North Carolina have motioned to double the rate of tax for online sportsbooks.
As part of the state Senate’s proposed budget, Senate Bill 257, for the 2025-2027 fiscal cycle put forward on Monday April 14, Republicans are looking to hike the tax rate from 18% to 36% from October 1 this year.
If successful, the twofold increase would place the Tar Heel State’s tax rate as the joint-fourth highest in the US, only topped by New York (51%), New Hampshire (51%), and Delaware (50%), while on a par with Pennsylvania.
In Illinois, the nation’s two largest operators, FanDuel and DraftKings, are required to pay 40% tax on all gross gambling revenue (GGR) due to the state’s sliding tax scale system, while other operators in the region contribute notably less.
SB 257 has already received the backing of the Senate’s Appropriations/Base Budget Standing Committee, Finance Standing Committee, and Pensions and Retirement and Aging Committee.
Since North Carolina’s regulated market launched in March 2024, the state’s eight legal operators have generated more than $135m in tax payments.
That figure has surpassed estimates made by state legislative researchers when the prospect of legalized online sports betting was originally debated.
According to the Associated Press(AP), it was predicted that North Carolina’s sports betting tax revenues would reach $100m annually within the regulated market’s first five years, though that target has already been surpassed in year one.
Under the new proposal, the state Senate has estimated that a doubling of the tax rate could generate an extra $53.4m for the state in FY 2025-2026, followed by an additional $79.8m the following fiscal year.
SB 257 would also increase the amount of tax revenue allocated to the state’s public university athletic departments.
Under the current framework, 13 University of North Carolina (UNC) System schools see their athletic departments receive $300,000 of online betting tax revenues each year, alongside 20% of the remaining proceeds.
If passed, the new proposal would introduce a tiered system of between $500,000 and $1.5m per school, with 20% of the remaining proceeds still being equally split among schools.
North Carolina is not the only US state exploring tax hikes to its online betting sector.
Last month, Ohio Governor Mike DeWine attempted to double the state’s tax rate from 20% to 40%, but the proposal was removed from the state Senate’s budget following a loss of support.
Wes Moore, Governor of Maryland, suggested raising the Old Line State’s rate of tax from 15% to 30%, but lacked support, before a second attempt to up the rate to 20% likewise failed to come to fruition.
In New Jersey, Governor Phil Murphy’s efforts to increase the tax rates on both the sports betting and igaming verticals to 25% are currently still active.
Meanwhile, other bills that could impact North Carolina’s regulated market include House Bill 828, sponsored by Representative Marcia Morey.
The bill proposes a blanket ban on all prop bets on college-level athletes, as well as prevent on-site wagering at collegiate sporting events before and during fixtures. Morey filed the same bill last year, though it failed to garner sufficient momentum.