The expansion of North Carolina sports betting is poised to start during the first half of 2024. The state will be able to capitalize on the licensing and tax revenue of a legal sports betting industry.
In-person sports betting was already legal at the state’s three tribal casinos, operated by the Eastern Band of Cherokee Indians and the Catawba Indian Nation. Starting in 2024, bettors can place wagers from their phones and other internet devices.
Below is an overview of North Carolina’s new sports betting law, the taxes and license fees the state will collect and how that money will be used, and revenue projections.
Expanded legal sports betting in North Carolina
Gov. Roy Cooper signed House Bill 347 into law in June 2023. It authorized 12 online sportsbooks and online licenses for the tribal casinos. It also expanded retail sports betting to be allowed at eight professional sports facilities.
The North Carolina Lottery Commission (NCLC) will regulate the industry. It must write the rules and regulations for sports betting, including the licensing process for operators. BetMGM Sportsbook NC and DraftKings Sportsbook NC have confirmed they will seek licenses in the state.
The earliest online sports betting in North Carolina can launch is Jan. 8, 2024. The NCLC must have the industry live by June 14, 2024. If sports betting launches on Jan. 8, it would be in time for the NFL playoffs and college football’s national championship game.
Tax rate on North Carolina sports betting revenue
Sportsbook operators will be taxed at 18% in North Carolina. The North Carolina House proposed a 14% tax, but the Senate increased the rate. The state will tax operators on its gross gaming revenue, which North Carolina law defines as “the total of amounts received by an interactive sports wagering operator from sports wagers as authorized under this Article less the amounts paid as winnings before any deductions for expenses, fees, or taxes.”
Operators in the state will not be allowed to deduct promotional spending from their gross gaming revenue.
Two of North Carolina’s neighbors – Virginia and Tennessee – offer legal sports betting. Virginia’s tax rate is 15%. In July, Tennessee started taxing operators based on the betting handle (total amount bet) instead of revenue.
Legal sports betting states similar in size to NC have varying tax rates. Michigan taxes online sports betting operators at 8.4%. Detroit’s three casinos pay an additional 1.25% municipal services fee on their online sports betting revenue. Ohio, which launched sports betting Jan. 1, 2023, doubled its tax rate on operators after only six months, increasing it from 10% to 20%.
Projected tax revenue from North Carolina sports betting
Many variables will determine how much tax revenue will be generated from sports betting. Those variables include the number of sportsbooks offering bets, the amount and types of wagers sportsbooks can offer, how much money North Carolina bettors are betting and how much they win.
The North Carolina General Assembly’s Fiscal Research Division estimated that sports betting would generate $64.6 million in taxes in its first year, reaching $100.6 million in the fourth year.
Neighboring Virginia generated $51.8 million in sports betting tax revenue in 2022. In Michigan, online sports betting generated $13.7 million in tax revenue in 2022.
Where does North Carolina sports betting tax revenue go?
North Carolina’s sports betting law prescribes several uses for tax revenue, including up to $500,000 for NCLC expenses. Money will also be directed in the following order of priority:
Responsible gaming ($2 million)
The North Carolina Department of Health and Human Services (NCDHHS) will get money for gambling addiction education and treatment programs, including the Stacked Deck curriculum. NCDHHS provides problem gambling treatment and recovery services, including online and in-person education and training for counselors and prevention and outreach programs, to promote responsible gambling in North Carolina.
Youth sports ($1 million)
North Carolina Amateur Sports will receive money to expand youth sports opportunities through a grant program. The law says awards should be used to buy youth sports equipment or to upgrade and improve public facilities that would benefit youth sports.
College athletic departments ($300,000 each)
Thirteen state universities, including five Historically Black College and Universities, will get $300,000 annually to support their athletic departments. The 13 schools in line for NC sports betting tax revenue:
- Appalachian State University;
- East Carolina University;
- Elizabeth City State University;
- Fayetteville State University;
- North Carolina Agricultural & Technical State University;
- North Carolina Central University;
- University of North Carolina at Asheville;
- University of North Carolina at Charlotte;
- University of North Carolina at Greensboro;
- University of North Carolina at Pembroke;
- University of North Carolina at Wilmington;
- Western Carolina University; and
- Winston-Salem State University.
North Carolina Youth Outdoor Engagement Commission grants ($1 million)
The commission can grant up to $5,000 to help teams travel to in-state or out-of-state sporting events and up to $25,000 to attract state, regional, area and national sporting events.
Remaining proceeds
If tax revenue exists after distribution to the above entities, the remaining revenue will be divided in three ways:
- 50%: To the state’s General Fund;
- 30%: To the North Carolina Major Events, Games and Attractions Fund; and
- 20%: Distributed equally to the above 13 universities for additional athletic department support.
North Carolina sports betting licensing fees
Each of the 12 online sportsbook licenses costs $1 million for an operator, with another $1 million renewal fee after five years. Service provider licenses cost $50,000, and sports wagering supplier licenses cost $30,000.
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