Online sports betting could potentially face a 36% tax increase in North Carolina.
Revamped Perspective:
North Carolina is mulling a significant bump in taxes for online sports betting, with lawmakers aiming to jack up the rate from the current 18% to an eye-popping 36%. This move would thrust the state into the upper echelons of U.S. jurisdictions competing for the highest tax rate, placing it neck-and-neck with Pennsylvania and shy of only New York, New Hampshire, and Delaware.
Didja Know?- If implemented, North Carolina's proposed tax rate would nearly double the current figure, placing it among the top contenders nationally.- Increased revenues for UNC schools look promising, with minimum payouts hiking from $300,000 to $500,000, and some schools potentially pulling in up to $1.5 million.- Launched only a year ago, online sports betting in North Carolina has already smashed early projections, raking in over $135 million in taxes.
The projected boost in tax revenue could translate to an extra $53.4 million for FY2025-26 and $79.8 million more the following year, according to estimates. The budget plan also places a strong emphasis on education, with thirteen universities in the UNC System set to receive a base payout of $300,000 from the betting tax revenue. With the new proposal, this minimum payout is raised to $500,000, and UNC-Chapel Hill and NC State are also thrown into the mix.
The advent of online sports betting in North Carolina, kick-started on March 11, 2024, has been a lucrative revelation. In just over a year, the eight licensed operators, including FanDuel, DraftKings, Caesars, and others, have paid a staggering $135 million in taxes. The initial projection believed it would take five years to reach $100 million in annual tax revenue.
March 2024 saw a record-breaking $685 million in bets. The total betting handle for the first year amounted to $6.6 billion, with gross gaming revenue standing at $713 million. The state accumulated $128 million in taxes at the current 18% rate.
Beyond the budget plan, several other bills are in the works. For instance, the Keeping Our Coaches Act eyes $11 million in tax revenue to help fund high school coaching salaries starting next school year. Another bill, House Bill 828, introduced by Rep. Marcia Morey, aims to ban prop bets on college athletes and restriction in-person betting activities during college games, demonstrating the rising concerns regarding betting in college sports and the potential for increased momentum for this bill.
It's not just North Carolina rethinking its betting tax structure. Illinois already employs a tiered tax system, while New Jersey, Massachusetts, and even Maryland are now weighing potential rate hikes. The stage is set for a taxation tussle among states, with discussions centered on standardized tax rates and proposals like the National Council of Legislators from Gaming States (NCLGS) suggesting a range of 15% to 25% for online gambling.
- The proposed tax rate for online sports betting in North Carolina, if implemented, would rise dramatically to 36%, making it one of the highest in the U.S.
- The increased tax rate could significantly boost revenues for universities in the UNC System, with minimum payouts potentially increasing from $300,000 to as high as $1.5 million for some schools.
- As North Carolina considers a higher tax rate for online sports betting, other states like Illinois, New Jersey, Massachusetts, and Maryland are also examining potential rate hikes in their own gaming jurisdictions.
