More taxes on sports betting? NC lawmakers discuss the possibility as industry pushes back

North Carolina lawmakers — who have been looking for ways to pay for a forthcoming budget that includes big raises for state employees — have been considering proposals that seek to squeeze more money out of games of chance. 

People familiar with state budget negotiations tell WRAL that lawmakers have discussed recommendations to increase taxes paid by sports betting companies and an additional tax to lottery sales and individual sports bets. The people spoke on the condition of anonymity because they weren’t authorized to publicly discuss the behind-the-scenes negotiations. 

The state’s eight legal sports betting operators pay an 18% tax on gross wagering revenue. Since the launch of legal sports betting in March 2024, the companies have paid more than $287 million in taxes. North Carolina doesn’t currently tax individual sports bets or lottery sales, which reached more than $6.58 billion in 2025.

No decisions have been made and the proposals could face tall hurdles — politically and practically — that could doom the ideas. The gambling industry opposes the move. But the discussions illustrate that lawmakers are exploring a wide range of ways to manage rising costs and the promise of lower income taxes. 

Earlier this week, Republican lawmakers announced they’d reached an agreement on key spending priorities, including raises for state workers and teachers. But they’ve yet to reach a final deal on a full budget. 

It was unclear Thursday whether top lawmakers would support the proposals for raising taxes on sports betting or the lottery. Leaders of the House and the Senate didn’t respond to requests for comment on the discussions. A spokesperson for the North Carolina State Lottery Commission, which oversees sports wagering in the state, said the lottery doesn't comment on legislative matters.

Top legislative budget-writers have said ‘anything is possible’ when asked about what lawmakers might target to make the budget calculus work. And an expected upward revision to state revenue projections could reduce pressure on lawmakers to find new sources of revenue.

Taxes on lottery sales and individual sports bets could present enough logistical challenges and opposition from bettors to scuttle those proposals, people familiar with the negotiations say. Increasing taxes on operators, however, could be a simpler solution and easier pitch to lawmakers. 

The mere notion of raising taxes on sports betting operators has already received opposition from the gambling industry, even before details of the current talks became widely known to the public.

The Sports Betting Alliance, a lobbying group for sports betting operators, launched a marketing campaign that called on people to express opposition to legislators. 

“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 last week in a text-message campaign. A spokesman for the alliance didn’t immediately respond to a request for comment on Thursday. 

The Senate approved a budget proposal last year that sought to double the tax rate paid by operators to 36%, putting it among the highest in the nation. The House proposal, also approved last year, would have kept the tax rate on sports betting operators at 18%. The chambers were unable to agree to a compromise budget last year.

People familiar with the negotiations told WRAL that discussions have centered on a possible tax rate of between 20% and 30%. Even though revenues from sports gambling taxes represent less than 1% of the state’s total budget, raising the rate could help pay for key projects. Had the rate started at 30% when North Carolina legalized sports gambling, the state would have raked in almost $200 million in additional tax revenue. That’s enough, for instance,  to replace funds that were recently diverted away from a program that was intended to improve access to healthcare in rural parts of the state — and still have tens of millions left over for other projects.  

Several states have tax rates of 50% or 51% on sports gambling operators, including New York, Oregon, New Hampshire, Rhode Island and Delaware.

Some of the state’s sports gambling tax revenues are required to go to specific initiatives such as youth sports, gambling addiction treatment and education, and athletic departments at 13 UNC System universities. Fifty percent  of the remaining revenue goes to the state’s general fund — the main pot of money legislators use to pay for state services like education, public safety, transportation and health care.

Operators warn that beneficiaries of gambling revenue could lose out if taxes are raised on bettors or betting operators. They also warn that higher taxes could lead to worse odds and fewer promotional offers for customers. And bettors will turn elsewhere — even to illegal options — if it becomes more expensive to bet legally in North Carolina, operators say.

“When states raise taxes, the costs get passed down to customers — directly hitting your wallet,” the Sports Betting Alliance said on a website opposing increased taxes for operators and bettors. “It punishes NC sports fans who play by the rules and pushes more people toward illegal offshore sites with no consumer protections.”

WRAL's documentary unit took a closer look at sports betting in North Carolina in "The Gamble," which can be viewed here.