North Carolina Lawamkers Consider Tax Hike for Sportsbooks

The Tar Heel State is the latest to consider a big change to its sports betting market.

North Carolina’s WRAL News has reported that lawmakers are considering adding a tax hike for sportsbooks in the state’s upcoming budget proposal. The state’s current rate is set at 18%, but reports suggest the budget could propose to raise that by up to 12%.

Reports also suggest lawmakers could be considering a per-wager tax, similar to the one used in Illinois. 

While North Carolina’s state legislature hasn’t confirmed the report, the Sports Betting Alliance sent a text message to bettors that appears to confirm it.

State Looks to Add Tax Cuts, Pay Increases 

While lawmakers aren’t sharing much about the proposal to raise taxes for sportsbooks, the move is not unexpected. 

North Carolina Governor Josh Stein had made some big promises for the upcoming budget with two goals in mind. The first involves roughly $380 million in tax cuts for lower and middle-class families in the state. The second is a pay raise for current and former state employees, including teachers.

Given the early success North Carolina’s market has seen, lawmakers likely hope a tax hike will help cover the costs to deliver on those promises.

Tax Hike Would Bring Risk for North Carolina

Since launching in March 2024, North Carolina’s mobile betting market has been a shining example for other states to follow. It set straightforward regulations that allowed sportsbooks some freedom while also protecting bettors.

Another possible reason for the Tar Heel State’s success is the 18% tax rate. This falls right around the national average, which still generated significant tax revenue while keeping the market competitive. 

A tax rate hike could change that, giving operators a reason to limit promos and water-down odd, ultimately costing the state money while making betting more expensive for residents. If lawmakers decided to add a per-wager tax instead, the fallout would likely be even worse.

Tax Hike Could Fuel Problem Gambling

If North Carolina passes a tax hike that leads to sportsbooks raising costs for bettors, it wouldn’t just hurt the state’s tax revenue.

Residents who are struggling with problem gambling won’t be able to easily stop betting on sports, even if costs go up. Instead, they’re more likely to spend beyond their means in order to maintain their wagering. This can lead to severe financial repercussions that are felt far sooner.

If struggling bettors can’t find the extra funds, they could still use sports prediction markets. These would likely be a cheaper option, but the industry lacks the problem gambling protocols to help those struggling with addiction. That can increase the damage, and make those affected feel even more isolated.