Up-Front Investment To Develop North Carolina Casinos Could Be $25 Million

The draft casino bill written by the North Carolina Senate would require a business to submit a $25 million fee with its application to become the state’s sole developer of three commercial casinos.

For the business selected by the secretary of administration, the submission fee would become a tax credit. For businesses not selected, the fee would be refunded.

The up-front payment would give the state an immediate influx of revenue during the development phase of the state’s three “entertainment districts.” On the contrary, once the commercial casinos were up and running, the parent company would avoid paying taxes until its tax bill surpassed $25 million.

Under this proposed plan, a North Carolina casino developer would receive confirmation it was the provisional choice of the state no later than Dec. 30, 2023.

Deadlines for a Class III gaming license

At the point the secretary of administration recommends a business to be the sole developer of casinos in the state, that developer would have a deadline of Dec. 31, 2024, to enter into an agreement with the secretary of commerce to begin development.

By that deadline, the business must have applied for and received a Class III gaming license valid for 30 years from the North Carolina Lottery Commission. Under that license, a business could offer all “Vegas-style” casino games and retail sports betting.

With a gaming license in hand, the business could present to the secretary of commerce its full plan to satisfy all criteria for development of the “Rural Tourism Incentive Program,” as the draft bill has been titled.

Tax rate, allocating tax revenue and promotional credits

The proposed tax for all casinos is a 22.5% excise tax on gross gaming revenue.

Under the proposal, however, a casino may deduct “bonuses or promotional credits exchanged for chips, tokens, tickets, electronic cards, or similar items that may be used to wager on Class III gaming.”

The casino operator would also have a $25 million tax credit to offset the initial submission fee.

Taxes would be paid monthly, and the law stipulates that all casino tax revenues, except as specifically provided in the bill, would go into the state’s General Fund.

To promote rural tourism, the state will allocate funding to certain counties based on their placement in the Department of Commerce’s tiered ranking of North Carolina’s 100 hundred counties by economic strength.

  • Tier 1 counties: the 40 most economically-distressed counties
  • Tier 2 counties: the next 40 economically-distressed counties
  • Tier 3 counties: the 20 least economically-distressed counties

Under the draft bill, a county that hosts one of the three entertainment districts – Rockingham, Nash and Anson – is entitled to 5% of the net proceeds collected in that county.

For other Tier 1 counties that do not host an entertainment district, 5% of the net proceeds will be distributed “on a per capita basis between the counties.”

For Tier 2 counties, 5% of the net proceeds will be distributed “on a per capita basis between the counties.”

Budget agreement still outstanding

Holidays, conference schedules and deadlocks on key issues have pushed the North Carolina Legislature nearly one month beyond the start of the fiscal year to agree on a state budget. Lawmakers, while still hammering away key issues, aren’t rushing.

A 2015 resolution allows them to roll over the previous year’s budget so the state can avoid a shutdown while they reach an agreement on a new budget.

Such an agreement may still be two weeks away. So North Carolinians interested in casino expansion in the Tar Heel state may have to wait until mid-August to find out whether commercial casinos will make it into this year’s budget. An NCSharp survey of 1,000 state residents indicated support for NC casino gaming expansion.

About the Author

Tyler Andrews

Tyler is the Managing Editor for NCSharp.com, covering sports, sports law, and gambling for the Tar Heel State. He has also covered similar topics for PlayTexas, PlayGeorgia, PlayCA, PlayFlorida, PlayOhio, and PlayMA. Tyler’s current focus is North Carolina’s pathway to gaming legalization.