After a year of legal sports betting, North Carolina is looking to cash in by doubling sports betting tax.
The Senate budget was put forward on Monday and has a provision to increase the tax from 18% to 36%.
The state legalized online sports betting in March 2024 and the industry has been thriving. There was over $6.6 billion placed in bets, which generated approximately $729.3 million for the eight active online sportsbooks.
At the current tax rate of 18%, that translates to $131.6 million in additional funds for the state. North Carolina bean counters predicted it would take 5 years to reach $100 million.
March 2025 set a new record for bets placed, with North Carolinans staking $685 million. This surpassed the high set in March 2024 of $659.4 million. Despite this, however, revenue was down 42% from last year, dropping to $38.4 million.
Spending plans in NC
The Senate expects an increased rate would see $53.4 million more in 2025-26 and $79.8 million more the following year. Previous estimates of $100 million over 5 years were way below the actual numbers, so these figures could also be conservative.
Extra funds gained are planend to go towards education, healthcare, and programs for gambling addiction. Currently, the state’s system schools receive $300,000 each plus a proportion of remaining proceeds. That is planned to increase to a $500,000 minimum with some schools getting as much as $1.5 million.
Sports betting tax across states
The proposed rate of 36% would make North Carolina among the states with the highest levies. New York tops the list with a hefty 51% rate. That has paid off with figures released this week showing record betting numbers in the Big Apple this year.
North Hampshire also has a rate of 51% followed by Delaware at 50% then Pennsylvania at 36%. Illinois switched to a more complex rate last year that sees leading sportsbooks FanDuel and DraftKings pay 40%. Others pay a reduced rate based on their revenues.
Other states have also tried to increase their levies. Massachusetts has proposed a bill to match the 51% of New York and New Hampshire. New Jersey Gov. Phil Murphy also included an increase in his budget that would make the state’s rate up to 25%.
Various others have tried, but failed to get approval for hikes. Ohio Gov. Mike DeWine’s effort to double the sports betting tax rate from 20% to 40% was scratched from the budget by lawmakers last week after it lost support in his own party. In Maryland, Gov. Wes Moore also failed to double the rate from 15% to 30% and even a lesser increase to 20% died.
Protecting state taxes
At the same time as states increase sports betting tax, they are also tackling the unregulated betting platforms that do not contribute. A host of states have proposed bills against sweepstakes casino, prediction markets, and other unlicensed operators.
Unregulated markets continue to thrive, however. A study last week showed that revenue generated in the unregulated sector outstrips the legal gambling industry.
Gamblers continue to use crypto sportsbooks, event trading, and other alternative platforms as with less regulation, they can receive better bonuses, promotions, and odds.
North Carolina will hope the shortfall from residents using unlicensed betting sites will be made up by the new tax increase.
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