North Carolina May Raise Sports Betting Tax for Budget Gap

North Carolina sports betting tax is back in the spotlight. State lawmakers are weighing a significant rate increase on sportsbook operators as budget negotiations stretch on, with pay rises for teachers and state employees among the spending items they need to fund.

The discussions are taking place behind closed doors. No proposal has been finalized, and it remains unclear whether legislative leaders support any of the measures currently on the table. Both House and Senate leaders declined to comment publicly, and the North Carolina State Lottery Commission said it does not weigh in on legislative matters.

What’s on the Table in Raleigh

North Carolina’s eight legal online sportsbooks currently pay 18% on gross wagering revenue. Since legal sports betting launched in the state in March 2024, operators have contributed more than $287 million in taxes. Lawmakers have discussed pushing that rate to somewhere between 20% and 30%.

A 30% rate would generate roughly $194.3 million annually based on last year’s figures, compared with under $116.6 million at the current rate. That is an additional $77.7 million. It sounds significant, but it would cover only a small share of the total spending gap lawmakers face.

Beyond the operator rate, lawmakers have also discussed taxing individual wagers and lottery purchases. North Carolina lottery sales exceeded $6.58 billion in 2025, and no added tax currently applies to those purchases. Both ideas face political resistance and practical complications that could prevent them from advancing.

A Budget With Bigger Ambitions Than Sports Betting Can Fill

Governor Josh Stein has proposed nearly $380 million in tax cuts for lower- and middle-income households alongside $804 million in salary increases for state employees and retirees. His plan also includes teacher raises, school supply stipends, bonuses, workforce development funding, and 10% pay increases for public safety personnel.

Sports betting revenue cannot carry that weight alone. Sportsbooks accepted $6.6 billion in wagers during the state’s 2025 fiscal year and retained roughly $647.7 million in revenue. Even a doubling of the tax rate to 36%, which the Senate proposed last year but the House rejected, would not come close to bridging the full budget gap. The two chambers failed to agree in the last cycle, leaving the existing 18% rate in place.

North Carolina is not an outlier in keeping rates relatively low. Nevada and Iowa tax operators at 6.75%. But New York, Rhode Island, New Hampshire, Oregon, and Delaware all impose rates of 50% or higher. The state has room to move before it reaches the upper range of what other markets charge.

The Industry Pushes Back

The possibility of a higher North Carolina sports betting tax has already triggered an organized response from the industry. The Sports Betting Alliance, which represents FanDuel, DraftKings, BetMGM, Fanatics, and bet365, launched a customer-facing campaign urging bettors to contact their lawmakers.

The group warned customers that higher taxes lead to worse odds, reduced promotions, and scaled-back incentives. FanDuel sent messages to its North Carolina users stating that any new tax hike would make game day more expensive and telling them to push back before it becomes law. The Sports Betting Alliance also argued that strong legal betting revenue supports collegiate athletic departments across the state, and that a tax increase could put that funding at risk.

Industry representatives made a broader warning too. When sports betting becomes more expensive through taxes, some bettors leave the legal market for offshore platforms and unregulated bookmakers. That outcome reduces both state revenue and consumer protections. Illinois introduced a per-bet surcharge last year and collected roughly $20 million in extra revenue during its first two months, but operators passed costs to consumers through surcharges and changes to betting conditions.

What Comes Next

Budget negotiations are expected to run through the summer. The General Assembly’s session is scheduled through August, though lawmakers have said they hope to finalize the budget before then. Until a concrete proposal surfaces, the North Carolina sports betting tax debate will remain a pressure point between a state that needs revenue and an industry that has already shown it will fight any increase hard.