North Carolina Budget Aims to Increase Sports Betting Tax Rate

• North Carolina lawmakers today approved the state’s nearly $34 billion budget
• The document will now be sent to Gov. Josh Stein (D) to potentially be signed into law
• The House and Senate both passed the document by wide margins

The fate of a North Carolina budget featuring an increase to the state’s sports betting tax rate and a new prediction market tax is now in the hands of Gov. Josh Stein (D).

Both the North Carolina House of Representatives and Senate today approved the state’s nearly $34 billion budget. The final budget includes an increase to North Carolina’s sports betting tax rate, a new tax on prediction market operators, and a change to the college disbursement of sports betting tax revenues.

The document has been sent to Stein to potentially be signed into law.

Senate, House Overwhelmingly Approve Budget

Both the Senate and House of Representatives today approved the state budget. The North Carolina House of Representatives first approved the budget by an 88-21 vote before being sent to the Senate. Less than two hours later the Senate approved the budget by a 35-10 vote.

The budget includes an increase from the state’s 18% sports betting tax rate to 23%. State lawmakers have discussed raising North Carolina’s sports betting tax rate since 2025, when Senate members included an increase of the rate to 36% in their approved budget. The House of Representatives, however, did not advocate for an increase and it was ultimately not included in the state’s finalized budget document.

North Carolina currently has eight licensed online sports betting operators who pay an 18% tax rate on gross sports betting revenue. So far in fiscal year 2026, the licensed sports betting operators have contributed more than $133 million in tax revenues to North Carolina, according to the North Carolina State Lottery Commission.

Under the new tax rate, the state would have taken in more than $170 million in tax revenues during the same period.

Changes to College Sports Betting Revenue Disbursements

Additionally, the budget will expand the number of North Carolina universities that will receive sports betting tax revenues. The University of North Carolina and North Carolina State, under the budget, will for the first time begin to see portions of the state’s sports betting tax revenues.

Currently, the state’s 13 other UNC schools receive sports betting tax revenue dollars, but UNC and NC State do not. Under the budget, the two largest UNC schools would be eligible to receive sports betting tax revenues beginning July 1, 2027.

Under the new budget, 2.2% of sports betting revenues annually will be distributed equally among Division I public universities, limited to $400,000 per school each year. For Division II public universities, 19.5% of sports betting revenues annually will be earmarked, limited to $2.9 million per school.

Finally, 5.7% will be earmarked annually among public universities in the state for which the men’s football program competes in the Division I football bowl subdivision of the NCAA. This will be limited to $2.5 million a year per school.

New Prediction Market Taxes

North Carolina lawmakers agreed to a new tax for Commodity Futures Trading Commission (CFTC) licensed prediction market operators. The document includes a new 6% trading fee tax for operators.

The 6% tax will be imposed on “the operator’s net trading fee revenue apportionable to the state.” The tax does not impose any license, registration, or other regulatory requirements or obligations for CFTC-licensed prediction market platforms to operate in the state.

The budget allows for sports event contracts to be traded in the state under a much less expensive rate than licensed sports betting operators. The budget also imposes no additional state regulations on CFTC-licensed prediction market operators.

Gambling Loss Deductions Included

The budget also includes an allowance for North Carolina gamblers to deduct losses against winnings on state income taxes. Currently, North Carolina gamblers have to pay taxes on their winnings during the year no matter their losses. This means, if a gambler wins $15,000 in bets on the year, but also loses $16,000 in bets on the year, they still are responsible for paying income taxes on the $15,000 won, despite losing $1,000 overall in bets on the year.

Up until last year, the federal government allowed gamblers to deduct losses on their taxes. President Donald J. Trump’s (R) One Big Beautiful Bill Act was signed into law in July 2025, which included a change to the Internal Revenue Code that only allows professional gamblers to deduct 90% of their losses in a year, down from 100%.

This will also potentially help offset a new bill passed by the North Carolina legislature requiring licensed sports betting operators report any users who win more than $2,000 in a year to the Department of Revenue to be taxed. It would allow users to deduct losses as well.