North Carolina Governor Signs Off on Increased Sports Betting Tax
North Carolina recently passed a state budget that increases the sports betting tax and imposes a new tax on prediction markets.
The bill to increase the sports betting tax in North Carolina, SB 257, passed the Senate and House overwhelmingly. It was then signed by Gov. Josh Stein, becoming law.
North Carolina's increased sports betting tax
The taxes on sports betting will increase from 18% to 23%, and prediction market platforms will be taxed 6% on net revenues.
In addition to the sports betting tax increase, the bill allocates more sports betting tax revenue to larger universities, such as North Carolina State and North Carolina.
Sports betting became legal in the Tar Heel State in 2024 and has since generated nearly $290 million in tax revenue.
Fear of losing tax dollars
Like lawmakers from other states, some in North Carolina are worried that tax revenue from state-regulated sportsbooks could dwindle because of prediction markets. The NC lawmakers have argued that, to avoid higher taxes, operators could simply add prediction-market offerings to their online sportsbooks.
"The revenue that we’ve been getting from sports betting is going to plummet," said Sen. Julie Mayfield. "And then that has all sorts of implications. Not just for our budget, but for the schools that have again come to rely on this money for their athletic programs.”
Same old song and dance
As in other states, North Carolina lawmakers have discussed regulating prediction markets, as the state is missing out on tax revenue from them. However, unlike other states, NC decided to impose a tax on their revenue rather than file a lawsuit to ban or regulate them.
Other states have filed similar lawsuits, including a recent temporary restraining order in Michigan that bans Kalshi from offering sports contracts in the state.
The prediction market platforms and the Commodity Futures Trading Commission (CFTC), which federally regulates them, have filed suits against the states to continue operating there.
It is the same old song and dance for the arguments on each side. The states believe sports trades are just like typical sports bets, and they should be taxed. Conversely, the platforms and the CFTC have argued that they should not be subject to a tax because they are federally regulated.
Big names getting a bigger cut
The tax revenue the state has received from sports betting goes to the state general fund and the UNC school system. However, the money from the school system went to schools without major athletic departments.
Under the new NC bill, the two major schools, North Carolina State and North Carolina, could receive $5.8 million in annual tax revenue.
Other major universities that will receive more money include Charlotte, Appalachian State, and East Carolina.
