North Carolina Lawmakers Approve Bill to Help Audit Bettors

Some big changes are coming to North Carolina’s sports betting market.

Lawmakers recently revealed a new tax hike for online sportsbooks, but they didn’t stop there. Both legislative chambers also passed S595, which will require the state to share information on bettors who win $2,000+ in a calendar year. This will allow the state to better audit bettors, ensuring they are reporting gambling wins correctly on their state tax filings.

The bill is currently awaiting a signature from Governor Josh Stein before becoming law.

Sportsbooks Must Provide Customer Info

If the Governor signs S595 into law, North Carolina sportsbooks would be required to share information on their customers. That includes players' ID info, the number of wagers placed, the outcomes of those wagers, and how much was won. 

The bill’s language in subsection 105-251.2 sets the new requirements for sportsbooks.

The Secretary shall, no more than one time per calendar year, request an interactive sports wagering operator to report the information required in this subsection to the Secretary for every registered player that received winnings of at least two thousand dollars ($2,000) in the prior calendar year. The Secretary may request the information be provided on a return, report, or otherwise. 

NC Bettors Should Be Nervous

There is a reason why bettors in the Tar Heel State are especially on edge over S595. 

North Carolina is one of 10 states that don’t allow bettors to deduct gambling losses on their state taxes. That means bettors are taxed based on the amount they won from successful bets without factoring in losses. As a result, a bettor who wins $2,500 but loses $5,000 in a year would still be taxed for the full $2,500. 

This affects even casual bettors, who would only need a few big wagers to put them over the $2,000 limit set by S595. 

While this requirement isn’t new, it seems lawmakers believe bettors have been misreporting winnings. The new bill would make it far easier to find and punish violators, capturing tax revenue the state is currently missing out on.

North Carolina Takes Big Risk

Since launching in March 2024, North Carolina’s sports betting market has been a great success. The state has generated over $250 million from mobile betting and seen over $10 million in nine consecutive months. However, that success may now be in jeopardy after the recent changes.

A 5% tax hike for online sportsbooks will generate some pushback from the industry. While it is unlikely to result in fees or higher minimum bet requirements, bettors could see worse odds and fewer bonuses as operators seek to absorb increased operating costs. This essentially passes the burden on to North Carolina bettors.

The biggest threat comes from S595’s new reporting requirements for sportsbooks. Active bettors will now be forced to fully account for winnings in a year, even if they ended up losing far more. This limits the possibility of ever winning big, limiting the thrill of placing wagers on sports. This could lead many bettors to leave the market, either abandoning the hobby or turning to sports prediction markets.