Online sports betting in North Carolina, now legal, is taxed at 18%, putting it at No.11 of 27 comparable states.
According to a September report from the Tax Foundation, out of 27 states with comparable sports betting allowances, North Carolina ranks No. 11 in taxes applied to sports betting. New York, New Hampshire, and Rhode Island are in a three-way tie for the highest tax rate, at 51%, while Iowa and Nevada are tied for last place at 6.75%.
The Tax Foundation report excludes Florida, Oregon, and Delaware. While online sports betting is also legal in these three states, distinctions exist making them poor comparisons for the bulk of states where betting your your favorite team is legal . In Oregon, for instance, it is only legal for professional sports, not college sports. North Carolina is one of 38 states that have legalized sports betting in some form.
“The North Carolina Constitution limits income tax rates to 7 percent. However, sports wagering revenue is not classified as income,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal. “As a result, the state is permitted to exceed the cap and levy an 18 percent tax rate.”
The September report from the North Carolina State Lottery Commission, published last week, shows that for September of FY25, “Gross Wagering Revenue” was over $70 million.
According to the NC State Lottery Commission, the “Gross Wagering Revenue” is the total amount an interactive sports wagering revenue an operator receives from sports wagers authorized under state law, less the amounts paid as winnings before any deductions for expenses, fees, or taxes.
“September generated approximately $12.6 million in tax revenue for North Carolina from sports wagering,” Harris told the Carolina Journal. “So far, this ranks as the highest month for fiscal year 2025 and the second highest since sports wagering launched in March 2024.”
This highest month so far was April, 2024 when “Gross Wagering Revenue” was $105.3 million, bringing the state government $18.9 million in taxes.
So, where does the tax revenue go? The first tranche is directed by the General Statutes:
All told, the preset allocations add up to $8.4 million.
Any remaining revenue is distributed as follows: 50 percent goes into the general fund, and 20 percent will be distributed evenly among the 13 state universities to support collegiate athletic departments. This excludes North Carolina State and the University of North Carolina. The final 30 percent will go to a new “North Carolina Major Events, Games, and Attractions Fund” to foster job creation and investment in the state.
Between March and June of FY24, the total “Gross Wagering Revenue” was $275.13 million, and the total tax revenue was $49.5 million.
The first three months of FY25 have totaled $146 million of “Gross Wagering Revenue” and $26.3 million in tax revenue.
“Assuming a continuation of the current trend in sports wagering, the fiscal year 2024-2025 is poised to generate approximately $188 million in tax revenue,” wrote Harris earlier this year. “Based on the current state law outlined above, this would provide nearly $90 million to the state’s General Fund.” Harris projected that it is feasible for the tax revenues to exceed these estimates.
The Carolina Journal will continue to track these numbers into the NFL and NCAA Division 1 seasons. The NCAA season started on August 24 and the NFL season began on September 5.