North Carolina has decided to raise the online sports betting tax from 18% to 23%, with the aim of funding Governor Josh Stein’s proposed $68 billion budget. The decision, confirmed by State Sen. Jim Burgin, comes amid concerns from sportsbooks and industry groups that this tax hike could lead to reduced odds and fewer promotions for bettors. This marks the end of North Carolina’s initial enthusiasm for legal sports betting, as local gamblers now face the reality of what a higher tax rate means for their winnings.
In This News
Lawmakers Opt for a Moderate Increase
Brian Murphy of WRAL News reported that lawmakers settled on a 5% increase, though higher rates were considered. Sen. Burgin originally pushed for a 50% tax, but the 23% compromise still aligns closely with the national average, keeping North Carolina competitive within the over 30 states taxing commercial sportsbooks. The modest increase aims to help fill the $3 billion spending gap in Stein’s budget, which focuses on public education, workforce development, and tax relief. Financially, the potential impact of this increase is clear. During the 2025 fiscal year, online sportsbooks in North Carolina pulled in $647.7 million in gross revenue, contributing $116.6 million to the state at the previous 18% rate. Under the new 23% tax rate, the state’s share would rise to approximately $148.9 million, adding around $32.3 million to state coffers.
Budgetary Goals and Challenges
The extra revenue is earmarked for several initiatives outlined in the ambitious 2025-27 budget. Governor Stein’s plan includes investment in public education, with $2.3 billion allocated to support educators through average salary raises of 11% and school supply stipends. Law enforcement and first responders are also promised pay increases of up to 15%. Still, moreover, Stein wants to fully fund Medicaid to secure healthcare for over three million residents and invest $448 million in job training and workforce housing. But whether these initiatives fully materialize depends on the success of the tax increase. Sports betting, while lucrative, operates on thin margins compared to other forms of gambling like slot machines, making it a limited source for state revenue.
Consumer Impact and Industry Response
Concerns loom over who will ultimately shoulder the tax increase. The Sports Betting Alliance warns that the additional costs could trickle down to consumers, potentially driving bettors to unregulated offshore options lacking consumer protections. The alliance has been vocal, urging North Carolina residents to voice opposition to the tax hike. Higher taxes might lead to leaner operations for sportsbooks, translating to worse odds and fewer betting incentives. Moreover, regulated sportsbooks argue they’re already at a disadvantage compared to federally regulated prediction markets, which are not subjected to the same tax pressures.
Future Implications
The next steps hinge on the state’s ability to balance its budget goals with maintaining a healthy gaming market. Lawmakers will need to closely monitor the impact of this tax hike — both on state revenue and consumer behavior. The effectiveness and sustainability of this financial strategy will likely be a focal point in the upcoming annual budget review.
Eri Gaitu leads the news desk at Best in Slot, tracking breaking developments across the gambling world in real time. From exclusive bonus offers and casino launches to licensing updates and regulatory shifts, Eri ensures readers are always first to know about the changes that matter to their gaming experience.
