What To Know About Sportsbook Promo Offers In North Carolina

In most state houses that have taken up the legalization of sports betting in a competitive marketplace, lawmakers reach a crossroads about whether to permit sportsbooks to deduct promotional credits from their taxable revenue.

Regulators in “late-approving states” have had the advantage of seeing what missteps were made in the pioneering sports betting states. In Ohio, for example, which launched sports betting on New Year’s Day 2023, regulators barred language like “risk-free bets” because it is misleading (as we’ll see). Previously Colorado rescinded its decision to allow sportsbooks to allow promo deductions.

In crafting a sports betting law, North Carolina will benefit from over 30 other states’ sports betting laws and experiences.

How North Carolina sports betting regulators handle promotional deductions in light of experiential data is as important to state revenue as it is to the individual bettor’s experience using a chosen sportsbook. NCSharp looks at how promo deductions can impact state tax revenue and an individual bettor’s betting account balance.

The debate over allowing tax deductions for promo offers

Sportsbook operators insist that they must offer promotions to prospective customers to entice them to sign up for their betting app instead of a rival’s version. They also point out that every state features illegal offshore sites that pay no tax revenue, and promotional credits bring many offshore gamblers over to the legal, regulated and taxed market.

While promo offers give sportsbooks a jump start in a new state, they cut against the short-term revenue for the state. This is because sports betting laws allow sportsbooks to deduct promotional credits from their reported taxable revenue, often cutting it dramatically. According to a February 2022 report on sports betting tax trends by the non-profit Tax Foundation, promotional bets in some states allow sportsbooks to deduct more than half of their gross gaming revenue submitted for taxes.

To strike a financial balance with sportsbooks, North Carolina lawmakers have developed a system of gradual release of promotional deductions. House Bill 347 would allow online sportsbooks to deduct 100% of their promotional offers from their revenue figures from launch (Jan. 8, 2024) until Jan. 9, 2025. After that, the books could use promo credits to deduct 2.5% of their tax obligations through 2025, and 2% through 2026, at which point promo credits would no longer be tax deductible.

The result, according to the state’s fiscal analysts, would jack up the state’s expected tax revenue from $2.9 million in the first six months of legal sports betting to $62 million in 2027 – an increase of more than 10 times the total.

Should HB 347 be signed into law, North Carolinians should expect a deluge of marketing and advertising spending.

That has been true to an extent in every state. But with only a year to fully benefit from the 100% promotional credit tax deduction, North Carolina sportsbooks will have even more incentive to chase market share before the tax break drops precipitously.

What kind of promo offers can North Carolina bettors expect?

Popular promotional offers include deposit matches, sign-up bonuses and “risk-free” or “no sweat” bets. While we aim to address a few offer types and provide some general clarity on these terms, it is incumbent upon all prospective bettors to carefully read a sportsbook’s terms and conditions before depositing their first dollar.

Understanding “play through” or “rollover” requirements

Before assessing promo offers, bettors should understand “play through” requirements.

Play through or “rollover” requirements exist in all promotional offers and determine when you can withdraw money. They indicate how much a bettor must “play through” or bet before any winnings can be withdrawn. This playthrough value is typically presented as a multiplier: 5X, 20X, 50X, etc.

In some cases, the play through amount includes the player’s own money plus the promo credit, while in other cases, it only includes promo credit.

For example, if a bettor deposits $20 and receives $20 in promo credit with a 10X playthrough requirement for both deposit and promo money, the bettor would have to bet 10 times $40, or $400, before they could withdraw any money.

As noted above, reading terms and conditions is vital before making any deposits. Sometimes a bettor may be unable to withdraw their own money before betting a significant amount.

Deposit match

Deposit matches allow new bettors to receive a credit from the sportsbook to match their original deposit ranging from $10 to over $1,000.

Upon making an initial deposit, the new customer triggers the promotion. Sometimes, a deposit match promo results in an immediate deposit to the bettor’s account. While the deposit match money can be immediately bet, it cannot be withdrawn. Any winning bets made with promotional money would not include a return of the promo money, only the winnings.

In other cases, the first deposit is only matched if the first bet placed using the bettor’s own money loses. At that point, a predetermined amount would be deposited back into the player’s account to be used before an expiration date – sometimes a week, sometimes a month. It would often include a play through multiplier as well. Again, terms and conditions would specify these variables.

Sign-up bonus

On a smaller scale than deposit matches, sign-up bonuses typically offer casual or risk-averse gamblers a dollar amount for signing up. Sometimes they require an initial deposit but not always. They’re typically small – to give bettors a taste before committing.

A “no-deposit” sign-up bonus might be for $25 while a $5 deposit might incur a $150 bonus. Again, the bonus offer money cannot be withdrawn and would not be included in any winnings.

A sportsbook’s terms and conditions would indicate if the same caveats are in place around play through requirements.

“Risk-free” bet

This term is put in scare quotes because there is no such thing as a risk free bet.

In many states, major sportsbook operators such as FanDuel, DraftKings, and BetMGM have offered $1,000 sign-up bonuses sometimes marketed as “risk-free” or “no-sweat” bets.

While it is true that after signing up and making a deposit, a “risk-free” bet may entitle you to make a $1,000 bet on the house, which, if it loses, doesn’t impact your account.

However, within a predetermined period – a week or a month, not typically more – you must make another $1,000 bet using your money. If it wins, you would profit just over $900, taking into consideration the “house” cut of the action.

And if you lose both bets? Then you “sweat” a loss of $1,000.

You’ve got to shop around

With the competitiveness of the sports betting industry, promo offers impact many bettors’ decisions about where to sign up. But there are no exclusivity rules around choosing one sportsbook and one set of promos and ignoring the rest.

If and, increasingly likely, when sports betting launches in North Carolina, sportsbooks will begin advertising pre-launch offers. All bettors should carefully read those offers and their terms and conditions and sample as many as possible before settling on a book. Remember, sports betting winnings are taxable income and should be reported as such.

NCSharp Managing Editor Tyler Andrews contributed to this story.

About the Author

John Brennan

John Brennan has covered the issue of the expansion of legal sports betting since New Jersey voters approved a ballot question backing the idea in 2011. He covered the lawsuit by the NFL and four other sports organizations against the state from 2012-018, when the U.S. Supreme Court struck down a 26-year-old federal law that effectively had given Nevada a monopoly on sports betting. Since then, Brennan has tracked betting legalization efforts in every state, including North Carolina.