An online sports betting bill that includes esports is progressing through the North Carolina Senate. The measure is two readings and a vote away from passage by the North Carolina General Assembly. If HB347 becomes law, it will bring a state with a population comparable to 2023’s powerhouse sports betting launch – Ohio – into the fold on Jan. 8, 2024.
Plus, North Carolina’s 11 million residents will have the option to bet on esports, which not all sports betting states offer. For instance, the No. 1 online casino gambling revenue state doesn’t yet allow esports betting. On March 28, Pennsylvania Rep. Ed Neilson, D-Philadelphia, introduced HB733 to change that. As of today, the bill remains in a House committee.
However, that inertia isn’t happening in North Carolina.
The Tar Heel State’s sports betting bill – introduced on March 13 by state Rep. Jason Saine, R-Lincoln – moved yesterday from the Senate Commerce and Insurance Committee to the Senate Finance Committee. (The measure already has fiscal notes attached to it for the latter body to consider.)
Should Senators approve HB347 before they adjourn on Aug. 31, Gov. Roy Cooper is expected to sign the bill into law quickly. He’s repeatedly expressed his support for legal mobile sportsbooks.
Meanwhile, if legalizing sports betting in North Carolina sounds like deja vu all over again, that’s because retail sportsbooks launched in 2021.
Details on North Carolina Esports Outlined in HB347
Esports betting is considered different from sports betting and online casino gambling by its fans.
However, the form of betting that allows wagers on the outcomes of video game tournaments is often lumped in with sports betting. Lumped in, that is, if it’s included at all.
That means that esports will also be taxed at 18% in North Carolina – as sportsbooks will be. That could price out esports-only skin survival.
For example, a tax rate may have contributed to the death of the only US attempt to embody that ideal. Vie.gg lasted for only six months in New Jersey, where the tax rate on mobile sportsbooks is 14.25%.
A proposal to separate out esports as its own form of betting, AB4397, stopped moving after a second reading on Feb. 23 in the New Jersey General Assembly.
As for existing esports bets, half of New Jersey sportsbooks offer them, said David L. Rebuck, the director of the New Jersey Division of Gaming Enforcement (DGE). He made the statement on April 20 when he spoke at the East Coast Gaming Congress (ECGC) in Atlantic City.
Then Rebuck added regarding esports wagering growth:
It’s gonna be a slow play.
Returning to North Carolina, HB347‘s fiscal note predicts sports betting and esports will generate “total tax and fee revenue of $13.2 million in FY 2023-24, increasing to $61.6 million in Fiscal Year 2027-28.”
However, that evaluation by the Fiscal Research Division of the North Carolina General Assembly assumes a tax rate of 14% and a marketplace launch date of Jan. 1, 2024. The bill calls for a start date of Jan. 8, 2024.
North Carolina Mobile Sports Betting More Like Ohio?
The March 28 fiscal note attached to North Carolina HB347 predicts tax and fee revenue of $13.2 million during Fiscal Year 2023. Considering online sportsbooks wouldn’t be able to launch until January, that’s nine months of revenue ending on Sept. 30, 2024.
The first full year of tax revenue outlined in the note estimates $22.2 million in Fiscal Year 2024.
As referenced earlier, the estimates are outdated now that the bill the Senate Commerce and Insurance Committee approved includes an amended tax rate. HB347 now reflects a tax rate of 18%.
Still, that means North Carolina will have a far different online sports betting marketplace than New Jersey. The Garden State, population 9 million, saw $798.5 million in online sports bets occur within its borders in April alone, reports David Danzis of PlayNJ. He noted that, unlike handle, New Jersey doesn’t break out online vs. land-based sports betting tax revenue, and they’re taxed at different rates. Like Bonus, PlayNJ is a Catena Media publication.
However, Ohio may be a closer match. The Midwestern state’s marketplace went live on Jan. 1, 2023.
That month, sportsbooks taxed at 10% generated nearly $21 million for state coffers. In the most recent tax revenue announcement, Buckeye State bettors ensured sportsbooks provided more than $9.5 million in tax revenue in March, according to Legal Sports Report. LSR is also a Catena brand.
Ohio’s 12 million residents may have benefited from Kentucky residents crossing into the state to place bets, but that window will soon close. The Bluegrass State legalized sports betting in March.
How Does North Carolina Compare?
While the North Carolina bill’s fiscal note didn’t mention a comparison state, it did say it pulled data from LSR and several other sources related to Colorado, Indiana, and Tennessee. Those are smaller markets than the other states mentioned: Michigan and Pennsylvania.
LSR reports that Colorado collected $3.1 million in taxes on $494 million in sports bets during March, with 99% of those wagers happening online. The state’s tax rate is 10%.
However, the North Carolina note also used data from Florida and Virginia, where online sportsbooks aren’t yet legal. (Let alone online esports betting.)