North Carolina Bill Proposes Tax Break for Gamblers on Losses

North Carolina lawmakers are considering a gambling tax deduction, offering players relief on reported losses.

House Bill 14 proposes allowing gamblers to deduct losses, aligning state tax rules with federal IRS regulations.

The bill could reduce tax burdens for casino players, sports bettors, and lottery participants, but it raises economic and social concerns.

Learn how this bill impacts North Carolina’s gambling market and why it has both supporters and critics.

North Carolina Bill Proposes Tax Break for Gamblers, Aligning with Federal Law

3 Key Points:

1. Gambling Loss Deduction Proposal: House Bill 14 would allow gamblers to deduct losses, ensuring they are only taxed on net winnings.
2. Potential Economic Impact: The bill could reduce state tax revenue, but proponents argue it creates a fairer tax system for gamblers.
3. Expanding NC’s Gaming Market: This measure comes as North Carolina continues expanding its gambling industry, including mobile sports betting and casino proposals.

A newly introduced North Carolina House bill aims to modify state tax policy, allowing residents to deduct gambling losses from their taxable income.

House Bill 14, filed on January 30, seeks to amend G.S. 105-153.5(a)(2), aligning North Carolina’s tax code with federal IRS rules.

Currently, under federal tax law (Section 165(d) of the Internal Revenue Code), gamblers can deduct losses if they itemize deductions. However, North Carolina does not offer a similar deduction at the state level.

If enacted, House Bill 14 would allow taxpayers to:

• Deduct gambling losses, provided they do not exceed total reported winnings.
• Apply the deduction to legal gambling activities, including the North Carolina Lottery, casinos, and online sports betting.
• Offset taxable winnings, ensuring that players are taxed on net earnings rather than gross payouts.

How This Bill Affects Taxpayers and State Revenue

The proposed change would benefit frequent gamblers by reducing taxable income, providing relief to those who experience significant losses.

However, from a state revenue perspective, allowing gambling loss deductions could shrink North Carolina’s tax base. Opponents argue that lost tax revenue could impact public funding, especially as gambling expansion brings new revenue streams.

Supporters of the bill emphasize fairness, stating that:
“Gamblers should not be taxed on gross winnings without recognizing legitimate losses, especially when other states, like Nevada and Pennsylvania, allow similar deductions.”

Opponents warn that the measure might unintentionally encourage problem gambling, creating the perception that gambling is financially viable despite losses.

North Carolina’s Expanding Gambling Landscape

This bill is the latest development in North Carolina’s evolving gaming market, following major regulatory changes in recent years:

• 2019: The state legalized in-person sports betting, allowing wagers at tribal casinos operated by the Eastern Band of Cherokee Indians and the Catawba Nation.
• 2023: Lawmakers approved mobile sports betting, bringing statewide online sportsbooks into the market.
• 2024: The state considered commercial casinos beyond tribal lands, sparking controversy over economic benefits and social risks.

Additionally, video gaming terminals (VGTs) have been a hotly debated issue, with proposals ranging from legalizing and taxing them to stricter enforcement against illegal operators.

With North Carolina’s gambling industry expanding, House Bill 14 reflects lawmakers’ efforts to adjust tax policies and create a competitive, regulated gaming environment.

A Game-Changer for North Carolina’s Gambling Market?

House Bill 14 introduces a significant tax change for North Carolina gamblers, aligning state tax policy with federal regulations.

While the bill could ease financial burdens on players, it raises economic and social concerns, particularly as North Carolina’s gaming market continues to grow.

If passed, this gambling tax deduction could further legitimize and regulate the industry, ensuring that players are taxed fairly while maintaining responsible gaming policies. However, the debate over its long-term impact on state revenues and gambling behaviors is far from over.