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Just two years after launching online sports betting, North Carolina lawmakers have approved a new tax increase that will raise the rate paid by operators from 18% to 23% of gross wagering revenue.
For sportsbook operators, this hike means a larger tax bill. For the state, it means millions of additional dollars flowing into public coffers.
For bettors, the impact is less direct, although a tax increase could eventually mean worse odds and diminished promotions.
“If the tax rate goes up, the costs are passed directly to customers. Sports fans end up paying more, despite using legal and regulated platforms. At the same time, higher taxes make illegal offshore sportsbooks more attractive, even though they lack age verification and consumer protections,” Sports Betting Alliance, an advocacy organization for online sports betting in the U.S., wrote in an appeal form.
The Path to an Increased Tax Rate
When North Carolina legalized online sports betting through House Bill 347 in 2023, lawmakers settled on an 18% tax rate for licensed operators. Governor Roy Cooper signed the legislation into law in June 2023, and online sportsbooks officially launched in March 2024.
At the time, the 18% rate was considered relatively aggressive compared to many other states.
But here we are again. Apparently, lawmakers have decided it was not aggressive enough.
Over the past several months, budget negotiations included discussions about pushing the tax rate as high as 30%, and, at one point, even higher figures were floated. Some lawmakers also explored ideas such as taxing individual wagers. Those proposals were dead on arrival.
Lawmakers need to finance ballooning budget
Since online betting went live in March 2024, North Carolina has collected hundreds of millions of dollars in sports betting taxes.
So when lawmakers began looking for ways to fund Governor Josh Stein’s proposed $68 billion biennial budget, betting operators quickly landed in the conversation.
Stein’s spending plan includes around $3 billion in additional spending targeted at public schools and childcare.
With a bill that large, lawmakers went hunting for extra revenue wherever they could find it. Online sportsbook operators became an easy target.
How North Carolina compares to other states
North Carolina will now sit ahead of several sports betting jurisdictions, including New Jersey, Ohio, and Massachusetts, giving it one of the higher operator tax rates in the country.
However, this is nowhere near the rate in New York, where sportsbooks face a 51% tax rate.
