North Carolina lawmakers have agreed to raise the tax on interactive sports betting operators from 18% to 23% as part of a new state budget deal.
The increase would apply to gross wagering revenue received after the measure officially becomes law, marking a significant shift in how the state approaches sports betting taxation.
The proposed rate is notably lower than the 36% figure that lawmakers had pushed for last year, representing something of a compromise between the industry and state government.
The conference report containing the tax increase still requires final votes in both the House and the Senate before it can be enacted.
North Carolina launched legal online sports betting in March 2024, and operators have paid more than $300m in state taxes since the market opened under the original 18% levy.
The budget also revises how sports betting tax revenue would be distributed, touching everything from education funding to gambling addiction programmes.
The Department of Revenue would continue to retain up to $500,000 annually for administration, and the North Carolina Education Lottery Commission would receive reimbursement for unrecovered regulatory costs.
The plan preserves $2m for gambling addiction treatment and education, alongside $2m earmarked for two youth sports programmes.
Previously issued $300,000 annual grants to each of 13 named public university athletic departments would be removed under the new structure.
Beginning 1 July of this year, 2.2% of remaining proceeds would be shared among public universities with predominantly Division I college athletics teams, with 19.5% going to those competing mainly in Division I or Division II.
UNC-Chapel Hill and North Carolina State University would become eligible for sports betting tax distributions under the revised formula, as neither school appeared on the earlier list of 13 institutions.
From 1 July 2027, a 5.7% class for public universities with Football Bowl Subdivision programmes would be introduced, with individual distributions capped at $2.5m.
Thirty percent of remaining revenue would flow to the Major Events, Games and Attractions Fund, capped at $30m annually, with the balance directed to the General Fund.
North Carolina’s move follows a broader national trend, with Illinois replacing its 15% rate in July 2024 with a graduated levy ranging from 20% to 40%, and Maryland raising its mobile sports wagering rate from 15% to 20% in 2025.
The budget package also introduces a separate 6% tax on prediction market operators’ North Carolina net trading fee revenue, effective from 1 January 2027, covering fees tied to sports event contract trades by North Carolina residents.
