Could online casinos be on the way in North Carolina?
It’s early, but we’ve heard some discussion about legalizing that sector. Online gaming is increasing in popularity, and other states have taken note.
Online casinos are legal in Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia. Rhode Island recently legalized online gaming as well, but it will not launch until March 2024.
There’s a chance that North Carolina eventually joins that list. As of now, the state does offer social and sweepstakes casinos, but key state legislators would like to expand gaming to include commercial and even online casinos.
Let’s take a look at what a North Carolina online casino market might look like, by comparing it to its closest comparable state: Michigan.
What kind of online casino revenue did Michigan see last month?
In August, per the Michigan Gaming Control Board, online casino gaming revenue in Michigan came out to $152.2 million, and the state took in $40.8 million in taxes.
Michigan’s online casino numbers for August 2023 are up 14% from its figures in August 2022 – a positive sign for the state’s industry. Michigan’s revenue for the month of August ranked third out of the six states with legal online gaming industries.
Since online casinos launched in January 2021, Michigan has collected more than $1 billion in taxes. Last month’s $40.8 million was the final nudge needed to surpass that mark.
Michigan’s timeline of 32 months to surpass $1 billion in online gaming taxes is a new record. Pennsylvania, the state that held the previous mark, took 36 months to cross the $1 billion threshold.
Online casinos are a staple in the legal gambling industry, as revenue totals from online gaming outpace those from sports betting and retail casinos.
Michigan and North Carolina share key comparable demographics
In key financial demographics, Michiganders and North Carolinians are side by side.
According to Forbes, the average annual income in North Carolina is $56,220, which ranks 26th nationally. Michigan’s average annual income sits slightly higher at $58,000, the 22nd-highest in the country.
Additionally, both states share similar figures when it comes to per capita disposable personal income. According to data from Statistica, Michigan clocks in at $49,256, while North Carolina ranks ever-so-slightly higher at $49,728.
Both states share a similar population size, too.
According to the latest census data, North Carolina’s population ranks ninth in the country with 10,698,973 people. Michigan follows at 10th, coming in at 10,034,113.
Is there support for online gaming in North Carolina?
Yes. And one of the main voices is Republican Rep. Jason Saine. Saine is the senior chair of the NC House Appropriations Committee, and he outlined his views on online gaming with an opinion piece in the Charlotte Observer.
“Permitting online gaming would ensure North Carolina maximizes tax revenue now and into the future, regulate and make sage a thriving illegal market, and complement traditional brick-and-mortar casinos,” he wrote.
Republicans have discussed the idea of expanding North Carolina’s gambling industry. While that expansion did not occur in 2023, Online gaming may end up being one idea that propels this expansion in the coming legislative session.
Potential North Carolina online casino tax revenue
Based on how alike Michigan and North Carolina’s demographics are, it’s safe to assume that both states could see similar taxes from iGaming. Both states are neck-and-neck with their populations, average incomes, and disposable incomes.
However, North Carolina probably won’t surpass Michigan’s monthly tax total from online casinos. Michigan’s industry has been operating for a couple of years, and even if North Carolina residents love their online gaming, it would be difficult to leapfrog a state that’s been functioning well since 2021.
Since the idea of online gaming is far down the road in North Carolina, we don’t know how many operators would do business in the state. With more operators come more opportunities for bettors to wager, and that number certainly would impact revenue numbers. Looking at Michigan, it boasts 15 online casinos.
There are also no set regulations in place, too, that could affect how taxes are collected.
Taking all this into consideration, North Carolina could see anywhere from $20-35 million in tax revenue.
It’s worth noting that Saine’s piece in the Charlotte Observer gave a projection on taxes.
“Industry experts project that full online gaming would yield nearly $300 million annually for the state, creating a new, reliable revenue stream that broadens the tax base and aligns with the smart fiscal policy the General Assembly has worked diligently to maintain.”
Saine’s figures might not be too far off base.
$300 million in taxes annually boils down to $25 million each month. That fits right into the range NCSharp projects.
There’s a chance online gaming skyrockets in North Carolina and makes a jump into the top three states nationally. But it’s a better bet to think conservatively on this one, considering online casinos aren’t coming any time soon.
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