North Carolinians are one stroke of the pen away from being allowed to bet legally on the Panthers, Hurricanes, Tar Heels and Blue Devils.
The state House agreed to Senate changes made to the North Carolina sports betting bill Wednesday for the second time, sending House Bill 347 to Gov. Roy Cooper for his signature. The House concurred with the Senate version of the bill, 69-44. Cooper is expected to sign the legislation into law.
“I really appreciate all the support, all the debate that has happened throughout this process. Not just in the House side, or the Senate side, but in committee as well,” House sponsor Jason Saine, R-Lincoln, said before debate on the bill and the final vote. “I just appreciate your support.”
North Carolina online sports betting could launch as soon as Jan. 8, 2024, but the North Carolina Lottery Commission has up to one year after the bill becomes law to get the industry off the ground. Contrary to other reports, the launch clock starts ticking when Cooper signs the bill. Therefore, the launch window for sports betting would be Jan. 8, 2024, to sometime in June 2024.
Up to 12 online sportsbooks would be allowed to operate in the state. Tribal casinos also would be allowed to conduct online sports betting outside of those 12 licenses.
“The law gives the commission up to a year to get the rules and regulations in place so 12 sports wagering operators as well as all their providers and suppliers can get licensed,” NC Lottery Communications Director Van Denton told NCSharp. “Once the legislation becomes law, the commission will start work to meet those responsibilities so that sports betting can begin and so that it will be conducted as responsibly as possible.”
Three significant changes the House agreed to included creating a pathway to horse race betting, increasing the tax rate on operators and eliminating tax write-offs for operators’ promotional spending. All three would increase the state revenue generated from sports betting compared with the original House version.
Pari-mutuel horse race wagering in final sports betting bill
After removing pari-mutuel betting from HB 347 before it passed the bill, the House agreed to the Senate’s decision to add it back. Doing so makes horse race betting legal, including online, should the governor sign the bill.
Pari-mutuel betting is a system in which bets are pooled together. Winners are paid out with money from the pool.
The bill also establishes licensing for advance deposit wagering (ADW). Applicants would pay a $20,000 fee for an ADW license to allow bettors to place their bets online and in advance of an upcoming horse race. This allows for betting on horse races such as the Kentucky Derby, Preakness and Belmont Stakes through a horse race betting app, such as FanDuel Racing.
Each ADW licensee annually would pay a 1% tax on the total pari-mutuel wagers placed by state residents.
The North Carolina Fiscal Research Division estimated revenue from pari-mutuel wagering would be $2 million in fiscal year 2023-24. The revenue generated is estimated to increase to $4 million in fiscal year 2027-28.
The tax rate on operators jumps
The Senate bumped the tax rate on operators’ gross gaming revenue to 18% from the initial House-approved 14% rate. The House agreed to the change.
North Carolina’s proposed tax rate falls between its neighbors with legal sports betting. Virginia’s tax rate is 15%. Tennessee’s rate is 20%. Tennessee, however, will start taxing operators’ handle on July 1 instead of operators’ revenue.
Fiscal Research estimated revenue from sports betting tax collections would start at $64.6 million in fiscal year 2024-25. That estimate jumps to $100.6 million in fiscal year 2027-28. Fiscal Research estimated FY 2024-25 tax revenue would be $22.2 million in the version that first cleared the House. FY 2027-28 tax revenue was estimated to be $61.6 million in the initial House version.
No promotional write-offs for sportsbooks
Beyond the higher tax rate adding to higher North Carolina sports betting revenue estimates, so does eliminating promotional spending write-offs for operators.
When a sportsbook launches in a state, it often entices consumers by offering promotional credits or bonus bets for creating an account and depositing money. You can find out more about the latest NC sports betting bonuses and promos currently available by following our link. In states where they are allowed to, operators can subtract the money spent on these offers from their taxable income. This means less tax revenue for the state.
The initial House-approved version of the North Carolina sports betting bill allowed operators to deduct promotion spending from their revenue. How much was deductible phased out until 2027, when no deductions would have been allowed.
The Senate removed these write-offs from the bill, and the House ultimately agreed to that change.
Other details in the North Carolina sports betting bill
Some of the additional details in the bill as it heads to the governor for his signature:
- Allows for betting on college sports;
- Charges $1 million every five years for sports betting licenses;
- Expands retail sports betting options to eight sports facilities, including Bank of America Stadium in Charlotte, Charlotte Motor Speedway, North Wilkesboro Speedway, PNC Arena in Raleigh, the Quail Hollow Club in Charlotte, Sedgefield Country Club in Greensboro, Spectrum Center in Charlotte and WakeMed Soccer Park in Cary. Currently, retail sports betting is only allowed at the state’s three tribal casinos;
- Allows bettors to fund their online accounts with credit cards;
- Sends $2 million in tax revenue to the Department of Health and Human Services to fight problem gambling.
House opposition to the bill
Four Democrats spoke Wednesday in opposition to gambling, the sports betting bill and the Senate’s changes to it: Reps. Pricey Harrison, D-Guilford; Abe Jones, D-Wake; John Autry, D-Mecklenburg; and Marcia Morey, D-Durham.
“This predatory gambling bill is still predatory, and is going to hurt North Carolina,” Harrison said. “It doesn’t look like we’re going to achieve very much in exchange.”
Although she opposed the bill, Harrison said eliminating the promotional spending write-offs and raising the tax rate on operators improved the bill. However, Harrison claimed the 18% tax rate was unconstitutional because of the 7% cap on income tax enshrined in the North Carolina Constitution.
Jones spoke about what gambling can do to families.
“Gambling preys on the weak. Many people are addicted to it, and it breaks up families,” Jones said. “In this body, I think we need to protect the family. This hurts families. It doesn’t help families.”
What’s next for sports betting?
Now that HB 347 has passed the North Carolina Legislature, it will be sent to the governor for approval. Cooper can sign the bill or allow it to become law by doing nothing. He also could veto the bill. However, Cooper has said he supports sports betting legislation.
“I am generally in support, supportive of the sports-betting legislation, but we’re continuing to look at it,” Cooper told reporters Tuesday.
State residents could start betting as soon as Jan. 8, 2024, in time for the NFL playoffs and Super Bowl. However, the North Carolina Lottery Commission has until one year after the bill becomes law to launch sports betting.
With sports betting in the mix, it could lead to a massive gambling expansion in North Carolina. The state could soon open itself up to video lottery terminals, retail casinos and online casinos.
Legislative leaders have recently expressed a willingness to discuss more gambling options in the state. Virginia opening new casinos near its border with North Carolina has pressured the state to respond. Legislation has been heard in the House Commerce Committee on legalizing video lottery terminals to combat illegal gaming machines.
According to WRAL-TV, House Speaker Tim Moore, R-Cleveland, wants casino expansion – the state is home to three tribal casinos – and VLT legalization combined into one bill to consider. Senate leader Phil Berger, R-Rockingham, said casino expansion should involve approval by communities targeted for new casinos.
“It would be important that there be some affirmation from the locality that they would like a casino if, in fact, we get to that point,” Berger said, according to WRAL-TV.