Sports Betting Industry Fights Back Against Proposed Tax Hike in North Carolina - (2025)

Updated: 12/06/2025

Betting companies and an anti-tax group are pushing back against a proposed tax hike on sports betting in North Carolina. The state's Senate is considering doubling the tax rate for legal online sports betting operators from 18% to 36%, a move that has sparked strong opposition from both the operators and anti-tax conservatives.

Sports betting operators argue that if the tax rate hike goes into effect, it could lead to worse odds and fewer promotions for users. Facing the prospect of a significant increase in taxes, operators have been actively encouraging their customers to reach out to lawmakers to express their concerns.

According to the North Carolina Lottery Commission, the state collected $8.4 million in taxes from $46.8 million in gross wagering revenue in April. Despite the revenue generated, bettors wagered over $576 million in the month, marking the second-lowest amount since September. Since the launch of sports betting in March 2024, the state has collected more than $143.7 million in taxes from over $7.8 billion in total wagers, reflecting the growing popularity of sports betting.

Grover Norquist, president of Americans For Tax Reform, has been vocal in opposing the proposed tax hike. In a letter addressed to state Senate leader Phil Berger, Norquist warns against the potential consequences of such a move. Drawing parallels to Illinois, where a tiered taxation system was implemented, Norquist highlighted the negative impact on both companies and bettors, underscoring the potential pitfalls of a sharp increase in the tax rate.

The legal landscape of sports betting in North Carolina underwent a significant transformation in 2023 after a prolonged battle resulted in the legalization of sports betting. The tax rate for operators has witnessed amendments, increasing from 8% in a 2021 proposal to the current 18%. Legal sports betting officially launched on March 11, 2024, with eight licensed operators in the state.

Among the permitted sports betting operators in North Carolina are industry giants such as Bet MGM, Draft Kings, FanDuel, and Fanatics Sportsbook. These operators collectively processed over $6.7 billion in paid bets between March 2024 and March 2025, showcasing the robust demand for legal sports wagering in the state.

The Sports Betting Alliance, representing the aforementioned operators, has been actively engaging bettors to mobilize against the proposed tax hike. With more than 14,500 letters sent to lawmakers, the Alliance is emphasizing the potential negative implications of increased taxes, warning of diminished odds and limited access to promotions and bonuses, which could inadvertently drive players towards illegal betting markets.

Aside from the tax hike, the Senate's proposed budget also entails significant changes in how tax revenue is allocated. A notable shift includes allocating more funding to athletics departments at UNC System schools while incorporating NC State and North Carolina into the distribution framework for the first time. The fiscal analysis of the legislation projects that the two ACC schools could receive $54 million over the subsequent two fiscal years if the proposal is ratified.

Despite federal tax laws allowing for the deduction of gambling losses, a North Carolina House bill seeking to enable bettors to deduct losses from winnings is unlikely to progress in the current session. Lawmakers, including Rep. Erin Pare, chair of the appropriations committee, expressed reservations about the bill. The state's tax revenue from gambling winnings stood at over $4.8 billion in 2024, necessitating bettors to claim the earnings on state income tax returns, potentially contributing more than $216 million to the state's revenue at the prevailing 4.5% tax rate.

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