North Carolina is preparing to move forward with an increased tax on sports betting, joining a handful of states that are seeking to get more revenue from the industry.
North Carolina’s new budget agreement would raise the tax on interactive sports betting operators to 23% from 18%. The increase would apply to gross wagering revenue received after the measure becomes law.
While the increase is significant, it is lower than the 36% rate lawmakers had sought last year. The conference report remains subject to final votes in the House and Senate.
North Carolina began legal online sports betting in March 2024, with the existing 18% levy applied to operators’ gross wagering revenue. Operators have paid more than $300m in state taxes since the market opened.
In addition to raising the tax rate on sports betting, the budget also amends how those funds would be distributed.
The Department of Revenue could continue to keep up to $500,000 a year for administration, while the North Carolina Education Lottery Commission would receive reimbursement for unrecovered regulatory costs.
The measure also preserves $2m for gambling addiction treatment and education, plus $2m for two youth sports programmes.
However, the previously issued $300,000 annual grants to each of 13 named public university athletic departments would be removed. Beginning 1 July of this year, 2.2% of remaining proceeds would be shared among public universities with predominantly Division I college athletics teams.
A further 19.5% would go to public universities competing mainly in Division I or Division II. The first class would be capped at $400,000 for each university, with the second capped at $2.9m.
From 1 July 2027, the state would add a 5.7% class for public universities with Football Bowl Subdivision programmes. Individual distributions under that class would be limited to $2.5m.
NC-Chapel Hill and NC State University benefit from changes
The formula would make UNC-Chapel Hill and North Carolina State University eligible for sports betting tax distributions. Neither school appeared in the earlier list of 13 institutions.
30% of remaining revenue would flow to the Major Events, Games and Attractions Fund, capped at $30m annually. The balance would go to the General Fund.
If approved, North Carolina would join other states that recently increased sports betting taxes. Illinois replaced its 15% rate in July 2024 with a graduated levy ranging from 20% to 40%.
Maryland raised its mobile sports wagering rate from 15% to 20% in 2025.
Recent tax increases in Illinois and Maryland did not produce an immediate contraction in reported sports betting activity. Both states recorded higher handle, operator revenue or state tax collections after the changes.
However, the figures do not isolate taxes from broader market growth, online wagering adoption and sports-calendar effects.
Separately, the package also creates a 6% tax on prediction market operators’ North Carolina net trading fee revenue from 1 January 2027. It would cover fees associated with sports event contract trades by North Carolina residents.
The tax would be calculated from fee revenue, rather than trading volume.
The proposed sports betting tax would take effect when the budget becomes law. Its revised distribution rules would start in July 2026, with the football-based allocation following one year later.
