North Carolina Proposes Doubling Sports Betting Tax to 36%

Less than a year after launching legal online sports betting, North Carolina may already rewrite the rulebook. The state Senate has proposed a dramatic tax hike, seeking to double the sports betting tax rate from 18% to 36%, placing North Carolina among the highest-taxed sports betting markets in the U.S. With soaring revenues and increased pressure to support public initiatives, lawmakers see betting taxes as a prime target for fiscal reform. Operators and stakeholders must prepare for significant financial recalculations as the debate intensifies ahead of the May budget deadlines.

North Carolina Senate Pushes to Double Sports Betting Tax as Revenues Exceed Expectations

3 Key Points:

1. The North Carolina Senate budget proposal would double the online sports betting tax from 18% to 36%.
2. If passed, the tax hike could generate $133 million more in state revenue over two years.
3. The proposal includes increased university funding and new bills targeting coaching pay and college prop bets.

North Carolina’s sports betting market may face a swift and steep tax increase under a new Senate budget proposal introduced for the 2025–2027 fiscal cycle. The proposed legislation seeks to raise the sports betting tax rate from 18% to 36%, potentially doubling operator obligations and making North Carolina one of the most expensive states in the country for online sportsbooks to operate.

If passed, North Carolina would tie with Pennsylvania as the second-highest taxed sports betting market in the U.S., behind New York (51%), New Hampshire (51%), and Delaware (50%).

Revenue Windfall Fuels Tax Talk

North Carolina launched its online sports betting market on March 11, 2024, and the first year has shattered expectations. According to the North Carolina State Lottery Commission, total handle through March 2025 reached $6.6 billion, with $713 million in gross gaming revenue (GGR).

At the current 18% tax rate, operators have contributed over $135 million in taxes—far exceeding the state’s original projection of $100 million annually by 2029.

This windfall has intensified legislative appetite to reallocate and increase funding for public programs, with sportsbooks seen as an attractive target for further taxation.

How the Revenue Will Be Used

The proposed tax hike would add an estimated $53.4 million in FY 2025–26 and $79.8 million in FY 2026–27, funding a variety of educational and sports-related initiatives.

Under the plan:

• All 13 University of North Carolina (UNC) System schools currently receiving $300,000 annually from betting revenues would see their base funding rise to $500,000.

• Larger institutions like UNC-Chapel Hill and NC State, previously excluded from direct allocations, would now be eligible—potentially receiving up to $1.5 million.

• The “Keeping Our Coaches Act” would allocate $11 million of annual sports betting revenue to support high school coaching salaries.

Additional Regulatory Bills in Play

Beyond taxation, lawmakers are eyeing reforms to protect collegiate athletes. House Bill 828, introduced by Rep. Marcia Morey, aims to:

• Ban prop bets involving college athletes.

• Restrict on-site betting during live college sporting events.

Though similar legislation failed in 2024, the national spotlight on college athlete wagering scandals may help HB 828 gain traction this time.

Industry Response and National Trends

North Carolina is not alone. A growing number of states are reviewing their sports betting tax frameworks:

• Illinois adopted a graduated model last year.

• New Jersey and Massachusetts are considering increases to match top-tier states.

• Ohio and Maryland saw efforts to double tax rates stall under industry pushback.

For operators like FanDuel, DraftKings, BetMGM, ESPN Bet, bet365, and Fanatics, higher taxes in North Carolina could significantly impact marketing spend, promotions, and overall profitability.

North Carolina’s proposed 36% sports betting tax rate signals a pivotal moment for the state’s gambling landscape. Fueled by higher-than-expected revenues and legislative ambitions, the move underscores a national trend toward heavier operator taxation in high-performing markets. While this could fund key public initiatives, it may also force operators to recalibrate their strategies in the Tar Heel State. As the legislative session continues, industry stakeholders must remain alert—the cost of doing business in North Carolina may soon double.