North Carolina Senate and House at Odds over Sports Betting Tax Hike

A battle is brewing between the North Carolina House and Senate over sports betting.

The House has released its two-year budget proposal, which does not include a tax hike for sports betting operators. This comes a couple of weeks after the Senate passed its proposal to double the current rate of 18%. The House’s decision to leave a tax increase out shows a significant divide between the two legislative bodies, potentially setting up a major showdown.

The chambers will now review each other’s budget proposals before returning them with their revisions. 

House Looking to Further Support College Sports

The Senate’s aggressive tax hike is driven by the desire to generate additional funding for North Carolina’s local colleges. Doubling the current rate would allow the state to send more money to the 13 UNC-system institutions. It would also enable UNC-Chapel Hill and North Carolina State University to receive funding without taking it from smaller schools. 

While the House agrees on increasing funding for UNC system schools, it believes it can be done by reallocating funds from other areas.

Will Proposals Head to Committee?

While we have not gotten feedback on either budget proposal, it seems unlikely the two sides will agree. That would require creating a committee with representatives from both chambers to find a compromise. 

The House already had a chance to weigh in on a tax hike, so don’t expect much debate when reviewing the proposal. However, the Senate could end up being a different story. As they review the House budget, opposition from the sports betting industry will continue to grow. This will add pressure to many lawmakers who are up for re-election next November, which could sway them to reject a tax hike.

Smaller Rate Increase Remains a Possibility

North Carolina has joined a long list of states that have attempted to double their tax rate for online sportsbook operators. Very few have succeeded, especially over the last year. Pushback from the industry has led to those bills failing, with many never even reaching a floor vote.

With so many failed attempts, some markets have been looking at alternative ways to increase industry tax revenue. One way to do that is a smaller tax increase, which could help generate more revenue without shrinking the state’s thriving market. Maryland recently used this tactic, and Louisiana is now attempting to do the same.

While the North Carolina House and Senate are far apart on the issue, don’t be surprised if a committee finds a smaller increase that both sides can agree on.