North Carolina Lawmakers Propose Increasing Sports Betting Tax

by Amelia Walker, April 23, 2025

North Carolina lawmakers are proposing to double sports betting tax to 36%. This would put them in a tie for the third-highest tax rate in the US.

SB 257 Proposal

The North Carolina Senate, led by Republicans, has released a two-year state budget proposal. Included in Senate Bill 257 is a provision to double the tax rate on sportsbooks from 18% to 36%. If approved, this change would place North Carolina among the top three highest sports betting tax rates in the US for states with multiple operators.

New York holds the highest rate at 51%, followed by Illinois, which uses a progressive tax rate ranging from 20% to 40%. North Carolina’s proposed rate would match Pennsylvania’s existing 36% rate.

The proposed increase aims to boost revenue from the rapidly growing sports betting industry. In its first year, the state brought in around $128 million in tax revenue—outperforming many expectations ahead of the March 2024 launch.

North Carolina currently has eight active sportsbook operators: bet365, BetMGM, Caesars, DraftKings, ESPN Bet, Fanatics, FanDuel, and Underdog. The state allows for up to 12 licenses to be issued.

Where the Additional Funds will Be Allocated

Currently, 13 schools within the UNC system each receive $300,000 and share 20% of the remaining proceeds equally. Under the proposed budget, those amounts would increase and become tiered rather than equal. Depending on their tier, schools would receive between $500,000 and $1.5 million, in addition to splitting the remaining 20% of proceeds.

The proposal also includes a requirement for UNC and NC State to increase games with other UNC System schools, aiming to strengthen in-state rivalries. Lawmakers recommend that by the 2039–40 season, each school schedules at least three regular-season or exhibition basketball games against all four Division II UNC System schools and two regular-season games against fellow Division I schools within the system.

A Senate Republican spokesperson said,

“This is tied to the sports gambling changes. With (NC) State and UNC in at a new ‘power conference athletics’ tier for the sports gambling revenue, it is our intent that they play the other system schools. “

Tax Hikes – A National Trend

North Carolina isn’t the first state to re-evaluate its sports betting tax structure. Ohio doubled its rate from 10% to 20%, with a possible increase to 40% being considered. Illinois uses a progressive tax system scaling up to 40%, and Kansas, currently at 10%, is also considering changes.

Since North Carolina launched sports betting, expansion has slowed nationwide. Thirty-eight states and Washington, D.C., now allow some form of sports betting, with Missouri expected to join soon. Other states, like Hawaii, are debating similar legislation.

In its first year of legal sports betting, North Carolinians wagered over $6.6 billion, generating around $713 million in gross revenue. Last month, it set a new betting record at $685 million, but revenue dropped 31% from the previous month to $38.1 million.