NC Lawmakers Debate Higher Sports Betting Taxes

North Carolina lawmakers are examining possible tax increases tied to sports betting and lottery activity as they work through budget negotiations that include raises for teachers and state employees.

Discussions taking place behind closed doors have included raising the current tax rate paid by sports betting operators and adding new taxes connected to lottery purchases and individual wagers, according to reports from WRAL citing people familiar with the negotiations. Those individuals spoke anonymously because they were not authorized to discuss the talks publicly.

The state’s eight legal online sportsbooks currently pay an 18% tax on gross wagering revenue. Since legal sports betting launched in North Carolina in March 2024, operators have contributed more than $287 million in taxes to the state. Lottery sales in North Carolina exceeded $6.58 billion in 2025 and are not currently subject to an added tax.

Republican lawmakers recently reached agreement on several spending priorities, including pay raises for teachers and state workers, though negotiations on the full budget remain unresolved. Legislators are continuing to look for ways to support the added spending while also maintaining plans for lower income taxes.

Budget Talks Bring Gambling Revenue Into Focus

State leaders have not finalized any proposals involving gambling-related taxes, and it remains unclear whether legislative leaders support the measures under discussion. WRAL reported that both House and Senate leaders declined requests for comment. A spokesperson for the North Carolina State Lottery Commission also said the agency does not comment on legislative matters.

People familiar with the negotiations said that lawmakers have discussed increasing the sports betting operator tax rate to somewhere between 20% and 30%. Last year, the Senate proposed doubling the rate to 36% as part of its budget plan, though the House backed keeping the rate at 18%. The two chambers failed to reach a compromise, leaving the existing rate in place for the current fiscal cycle.

Gov. Josh Stein has proposed significant spending increases for the 2026-27 fiscal year. His plan includes nearly $380 million in tax cuts for lower- and middle-income households, along with funding for salary increases for state employees and retirees estimated at $804 million. Stein has also called for more education funding, teacher raises, bonuses, school supply stipends, workforce development investments through community colleges, apprenticeship funding, and 10% salary increases for public safety personnel.

Sports betting revenue alone would cover only a small share of that spending. According to figures reported by the North Carolina Lottery Commission, sportsbooks accepted $6.6 billion in wagers during the state’s 2025 fiscal year and retained roughly $647.7 million in revenue. Sports betting taxes generated less than $116.6 million during that period.

Even with a higher tax rate of 30%, the state would collect roughly $194.3 million, an increase of about $77.7 million compared with the current structure.

Several states already impose significantly higher sports betting taxes than North Carolina. New York, Rhode Island, New Hampshire, Oregon, and Delaware each tax operators at rates of 50% or higher. Nevada and Iowa maintain some of the lowest rates in the country at 6.75%.

Industry Groups Push Back Against Tax Plans

The possibility of higher taxes has already triggered resistance from sportsbook operators and lobbying groups.

The Sports Betting Alliance, which represents companies including FanDuel, DraftKings, BetMGM, Fanatics, and bet365, recently launched a campaign urging customers to oppose potential tax increases.

“Right now, some lawmakers in Raleigh are pushing for a massage tax hike on legal sports wagering that punishes fans who are just playing by the rules,” the group said in a text-message campaign.

The organization also warned customers through its website that, “When states raise taxes, the costs get passed down to customers — directly hitting your wallet.”

One message distributed by FanDuel stated that “some lawmakers in Raleigh want a brand new tax hike on N.C. fans.” The company added that “if we don’t stop them, bettors like you will pay the price” and that “your gameday gets more expensive every time you open the app.”

The Sports Betting Alliance encouraged users to contact lawmakers through its online campaign. A letter promoted through the effort stated, “Legal sports betting is generating real revenue for collegiate athletic departments across the state. A tax hike would threaten that funding and hit fans like me directly.”

Operators argue that increased taxes could lead sportsbooks to offer less favorable odds, reduce promotions, and scale back customer incentives. Industry representatives have also warned that higher costs may drive bettors toward unregulated offshore sportsbooks or illegal bookmakers.

Additional Gambling Taxes Under Discussion

Beyond raising operator tax rates, lawmakers have also discussed the possibility of adding taxes on individual sports wagers and lottery purchases. According to WRAL, those ideas could face political opposition and practical complications that may prevent them from advancing.

Illinois introduced a per-bet surcharge last year that charges sportsbooks 25 cents on the first 20 million bets and 50 cents on wagers beyond that threshold. Reports cited in the discussions noted that the fee generated an additional $20 million for Illinois during the first two months of 2026.

Sports betting companies strongly opposed the Illinois system and later passed some of those costs to consumers through surcharges and changes to betting conditions. Industry groups claim similar measures in North Carolina could reduce participation in the legal market.

North Carolina lawmakers are expected to continue budget negotiations through the summer as the General Assembly works toward completing a final spending plan. The legislative session is scheduled to run through August, though leaders hope to finalize the budget sooner.