Proposed North Carolina Sports Betting Tax May Nearly Double under Lawmakers' Plans
In a surprising move, the North Carolina Senate has proposed a significant increase in the tax rate on online sports betting operators. The proposed change would see the tax rate doubled from the current 18% to a staggering 36%, making North Carolina one of the highest taxed sports betting markets in the US.
Under the current tax regime, North Carolina's sportsbooks generated $65.2 million in revenue on a handle of $562.2 million in May 2025. If the tax rate is indeed doubled, the state's share through nine months of the 2025 fiscal year would soar to an estimated $171,664,109.
This proposed hike would place North Carolina among the highest taxed sports betting markets, exceeded only by a few states with tiered or very high rates such as Illinois. Illinois's complex system taxes sportsbooks between 20% and 40% based on gross wagering receipts and adds a per-wager tax, which has already caused operators like FanDuel to add a $0.50 transaction fee per bet.
The proposed increase is part of a two-year budget plan unveiled on April 16, 2025, aiming to use higher sports betting tax proceeds to support the UNC System's sports. The budget proposal also aims to provide more financial athletic support to colleges and universities in the UNC System.
Notable provisions in the budget include the requirement for UNC-Chapel Hill and NC State to schedule at least three regular season or exhibition games against each constituent institution team competing at the NCAA Division II level by 2039-40. For these institutions to receive sports betting tax money, they must play every UNC System NCAA Division I basketball program at least two times by the same date.
The state's 16 public places of higher learning are part of the UNC System. The provision for UNC-Chapel Hill and NC State is known as the "North Carolina Sports Rivalries" in the Senate's budget outline.
It's important to note that most states with legal sports betting take between 10% and 20% of oddsmakers' revenue. The lowest online sports betting tax rate is 6.75% in Iowa and Nevada. North Carolina, however, shares borders with two states - Virginia (15% tax on revenue) and Tennessee (effective tax rate of roughly 20%) - with higher tax rates.
The proposed change, if approved, would make North Carolina's sports betting tax rate the third-highest among all states with legal sports betting as of mid-2025. The table below compares North Carolina's proposed tax rate with those of other states:
| State | Current or Proposed Tax Rate on Sportsbooks | Notes | |----------------|------------------------------------------------------------------------|-------------------------------------------------| | **North Carolina** | Proposed increase to **36%** | Would be the third-highest rate nationally[2] | | Illinois | Tiered rate from 20% up to 40% depending on adjusted gross receipts + new per-wager tax starting July 1, 2025 | Tax tiers up to 40% plus up to $0.50 per bet; one of the highest overall burdens[1] | | Other states | Varies widely, most below 36%, many around 10-20% | North Carolina’s proposed 36% would be steep in comparison[2][1] |
This proposed tax hike could increase the cost burden on operators and potentially affect the market dynamics in the state. The decision is currently under review and is expected to have significant implications for the sports betting industry in North Carolina.
[1] - Source: The Action Network [2] - Source: Legal Sports Report
- The North Carolina Senate has proposed a significant increase in the tax rate on online sports betting operators, aiming to double it from the current 18% to 36%.
- Under the current tax regime, North Carolina's sportsbooks generated $65.2 million in revenue on a handle of $562.2 million in May 2025.
- If the tax rate is doubled, the state's share through nine months of the 2025 fiscal year would soar to an estimated $171,664,109.
- This proposed hike would place North Carolina among the highest taxed sports betting markets, exceeded only by a few states with tiered or very high rates such as Illinois.
- The proposed increase is part of a two-year budget plan, aiming to use higher sports betting tax proceeds to support the UNC System's sports.
- The budget proposal also aims to provide more financial athletic support to colleges and universities in the UNC System.
- Notable provisions in the budget include the requirement for UNC-Chapel Hill and NC State to schedule at least three regular season or exhibition games against each constituent institution team competing at the NCAA Division II level by 2039-40.
- The state's 16 public places of higher learning are part of the UNC System, and the provision for UNC-Chapel Hill and NC State is known as the "North Carolina Sports Rivalries" in the Senate's budget outline.
- The decision on this proposed tax hike is currently under review and is expected to have significant implications for the sports betting industry in North Carolina, potentially affecting the market dynamics and cost burden on operators.
