North Carolina Tax Increase Delivers Spike in Tax Revenue

The Tar Heel State’s tax hike on sportsbooks is already paying dividends. 

The North Carolina State Lottery Commission (NCSLC) has released its revenue report for July, the first month with the state’s new 23% tax rate in place. Bettors wagered $556 million that month, resulting in just over $14 million in tax revenue. The handle was up about $200 million year over year, thanks to the knockout rounds of the 2026 World Cup.

While the handle was slightly down compared with June, tax revenue was up by over $4 million.

World Cup Played Major Role

July’s numbers from the NCSLC are impressive, but the 2026 World Cup played a major role. 

Like many other US betting states, North Carolina saw underwhelming tax revenue numbers in June. This was the result of the World Cup’s group stage, where the favored teams won at a very high rate. This led to more winnings for bettors and less money for the state.

July was a different story as the tournament entered its knockout stage. This caused the win rate to drop significantly, leading to the highest monthly handle of 2026 since January. 

Too Early to Call Tax Hike a Success

While the state’s new tax rate helped generate additional tax revenue, there is no guarantee that success will continue. 

The biggest question is how sportsbooks will respond now that the World Cup is over. While they haven’t announced any action to counteract the rising operating costs, that doesn’t mean they won’t limit promos and water down odds. 

This would increase costs for bettors and lead some to leave North Carolina’s regulated market. As a result, some would pursue alternative betting options, such as prediction markets. This could cause the state’s handle to drop, along with tax revenue.

NC Continues Effort to Tax Sports Contracts

North Carolina lawmakers aren’t only targeting regulated sportsbooks to increase tax revenue.

The state’s latest approved budget included a new 6% tax on the net revenue of prediction markets. It’s set to take effect on January 1, 2027, but the state’s ability to enforce it remains in question. It has led to a legal battle with prediction markets, meaning the courts will ultimately decide its legality.

While the state’s tax has angered the prediction industry, North Carolina has stopped short of banning or forcing operators out. It is one of the few states focused on taxing the emerging industry instead of passing laws to make them illegal.