North Carolina Set to Raise Sports Betting Tax to 23%

Sports betting is becoming a bigger business for states than sportsbooks expected. North Carolina is the latest example.

Just over a year after launching legal online sports betting, lawmakers already want operators to pay more. The proposed tax increase isn’t the highest in America, but it signals a growing trend. States are discovering that regulated betting generates reliable tax income, and many now believe sportsbooks can afford to contribute more.

If you operate a sportsbook, invest in gaming, or simply follow the US gambling market, this proposal deserves attention. Tax policy doesn’t just affect operators. It influences bonuses, promotions, market competition, and ultimately the customer experience.

Here’s what North Carolina’s proposal includes, who benefits, and why this may be another sign that America’s low-tax sports betting era is slowly disappearing.

What You’ll Learn

• Why North Carolina wants to increase sportsbook taxes.
• How the new tax compares with other US gambling markets.
• Where the additional betting revenue will be spent.
• What higher gambling taxes could mean for operators and players.

North Carolina Wants a Bigger Slice of Sports Betting Revenue

North Carolina’s sports betting market has barely completed its first full year, yet lawmakers are already preparing to rewrite its financial model.

Under the state’s latest budget proposal, the tax on online sportsbooks would increase from 18% to 23% of gross wagering revenue. While the measure still requires final approval from both legislative chambers, its direction is clear.

The conversation is no longer about whether sports betting should be taxed.

It’s about how much states believe they can collect without damaging the market.

A Young Market That Already Produces Serious Revenue

North Carolina launched regulated online sports betting in March 2024.

Since then, licensed operators have generated more than $300 million in tax revenue for the state.

Those numbers have strengthened lawmakers’ confidence that sports betting represents a dependable source of public income.

That confidence explains why legislators are seeking another increase despite the market still being in its early growth phase.

The proposed 23% rate remains below the 36% lawmakers previously discussed last year, suggesting the final compromise attempts to balance government revenue with commercial reality.

Higher Taxes Rarely Stay Inside the Boardroom

Governments often argue that sportsbooks can absorb higher taxes.

Reality is usually more complicated.

Operators rarely accept lower margins without making adjustments elsewhere.

In mature betting markets, higher tax rates often lead to reduced promotional offers, tighter odds, smaller bonus budgets, or slower expansion into new products.

Players may not immediately notice the changes.

Eventually, however, the economics begin to show.

North Carolina’s proposed increase is unlikely to trigger a market collapse. Still, anyone expecting sportsbooks to simply pay more without adapting their business model misunderstands how competitive gambling markets operate.

The Revenue Distribution Is Also Changing

The proposal does more than raise taxes.

It also changes where the money goes.

The Department of Revenue would continue receiving funding for administration, while the North Carolina Education Lottery Commission would recover its regulatory costs.

The proposal also preserves $2 million annually for gambling addiction treatment and education.

Another $2 million remains allocated to youth sports initiatives.

Those allocations are difficult to criticize.

Responsible gambling funding often receives far less attention than tax collection, despite being equally important to a sustainable gambling industry.

Universities Become the Biggest Winners

The largest structural changes involve higher education.

Instead of providing fixed annual grants to 13 selected universities, the proposal introduces a broader distribution formula covering more public institutions.

Beginning in July 2026, portions of sports betting tax revenue will be shared among Division I and Division II athletic programs.

From July 2027, another funding category will specifically benefit universities competing in the Football Bowl Subdivision.

The revised formula also allows UNC-Chapel Hill and North Carolina State University to receive funding, something they were previously excluded from.

The changes reflect an effort to spread gambling revenue across a wider group of institutions rather than concentrating it among a limited number of schools.

Sports Betting Is Becoming a Bigger Budget Tool

North Carolina isn’t acting alone.

Across the United States, governments are steadily increasing gambling taxes.

Illinois replaced its flat 15% sportsbook tax with a graduated system ranging from 20% to 40%.

Maryland increased its mobile betting tax from 15% to 20%.

Ohio previously doubled its sports betting tax from 10% to 20%.

Louisiana recently approved an increase from 15% to 21.5%.

A clear pattern is emerging.

States initially introduced competitive tax rates to attract operators and establish legal markets.

Now that those markets are producing stable revenue, many governments believe sportsbooks have fewer bargaining chips.

The industry’s success has effectively made it an easier target for higher taxation.

Prediction Markets Are Also Entering the Tax Net

The budget proposal extends beyond traditional sportsbooks.

Beginning in January 2027, North Carolina plans to introduce a 6% tax on prediction market operators.

Unlike sportsbook taxation, this levy would apply to net trading fee revenue generated from sports-related event contracts involving North Carolina residents.

This reflects another important shift.

Prediction markets increasingly resemble gambling products in the eyes of many lawmakers, even when operators position themselves as financial trading platforms.

Expect more states to examine this area closely over the next few years.

Will Higher Taxes Hurt the Market?

That remains the biggest question.

Early evidence from Illinois and Maryland suggests higher tax rates did not immediately reduce betting activity.

Handle continued growing.

Tax collections increased.

Operator revenue remained relatively strong.

However, those figures should be viewed carefully.

Sports betting markets naturally expand during their early years.

Customer acquisition continues.

Mobile adoption increases.

Major sporting events create seasonal spikes.

None of those factors make it easy to isolate the direct impact of taxation.

The long-term effects will only become clear after several years of stable market conditions.

Conclusion

North Carolina’s proposed tax increase isn’t simply another budget measure. It’s part of a nationwide shift in how governments view sports betting.

States no longer see sportsbooks as emerging businesses that need tax incentives. They increasingly view them as mature revenue generators capable of supporting larger public budgets.

For operators, that means tighter margins and greater pressure to innovate. For players, it serves as a reminder that generous bonuses and aggressive promotions are often the first casualties when taxes rise.

The lesson is simple: when governments collect more, sportsbooks rarely absorb the full cost. The market always adjusts—and experienced bettors know it’s those subtle changes, not the headlines, that matter most.