North Carolina Increases Online Sports Betting Tax to 23%

North Carolina lawmakers have agreed to increase the state tax on online sports betting revenue from 18% to 23%. This decision, part of a broader budget negotiation, aims to generate additional funds for Governor Josh Stein’s proposed $68 billion spending plan. The increase, a 5% jump in the tax rate, is expected to yield an estimated $32.3 million more for the state in the 2025 fiscal year.

Impact on State Revenue

During the 2025 fiscal year, North Carolina’s online sportsbooks reported gross revenue of $647.7 million. At the previous 18% tax rate, the state’s share was approximately $116.6 million. With the new 23% tax rate, this figure rises to an estimated $148.9 million. While this represents a significant increase in state revenue from this sector, industry observers note that it remains in line with the national average for states that tax commercial sportsbooks.

Funding the State Budget

The tax increase is a component of Governor Stein’s budget proposal, which emphasizes increased spending on public education, child care, workforce development, and tax relief for lower and middle-income families. Key initiatives include proposed average raises of 11% for educators, $300 annual school supply stipends, pay raises of up to 15% for law enforcement and first responders, full Medicaid funding, and a $448 million investment in job training and workforce housing.

Concerns for Bettors and Operators

Sportsbooks and industry groups have voiced concerns that the higher tax rate could ultimately be passed on to consumers. The Sports Betting Alliance warned that such a move could lead to “worse odds and fewer promotions” for North Carolina sports fans. They argue that increased taxes can penalize customers and potentially drive them toward unregulated offshore betting sites, which lack consumer protections.

While State Senator Jim Burgin (R-Lee, Harnett) confirmed the 23% rate, he had initially sought a much higher tax of 50%. The eventual 23% rate is seen by some as a compromise that balances the need for state revenue with the operational realities of the sports betting industry, which is considered a smaller-margin business compared to other forms of gambling like slot machines.

The decision comes as North Carolina’s online sports betting market continues to mature. The state launched legal online sports wagering in March 2024, and the tax revenue generated is a new, albeit growing, source of funding for state initiatives. The debate over how much to tax the sector highlights the ongoing balancing act between maximizing state income and fostering a competitive and accessible regulated market.

Key facts

The implications of this tax increase are significant for the regulated online sports betting market in North Carolina. For players, it could mean less favorable betting lines and reduced promotional offers from licensed operators. For the state, it represents a modest but welcome boost to its budget, aimed at funding key public services. It also sets a precedent for how North Carolina will approach taxing the evolving sports betting industry moving forward.

Source: Casino.org News, https://www.casino.org/news/north-carolina-jacks-up-tax-on-online-sportsbooks/