UNC, NC State to get millions from sports betting; gambling deductions allowed in budget proposal

The University of North Carolina and NC State University could finally be getting a cut of the revenue from sports gambling taxes.

UNC and NC State, the state's largest and most popular public school athletics departments, have been left out of distributions from taxes on sports betting operators that have flowed to the other 13 UNC System schools.

But a proposal expected to be included in the state budget would include the Triangle rivals in a revamped distribution model. The schools — along with other Football Bowl Subdivision Appalachian State, Charlotte and East Carolina — could receive up to $5.8 million annually beginning July 1, 2027, according to the proposal, which was reviewed by WRAL.

It is not the only dramatic change to sports wagering expected to appear in the budget, the details of which are being negotiated by Senate and House leaders. The spending deal could be released as soon as this week with votes needed in both chambers before it heads to Gov. Josh Stein’s desk for his signature or veto.

A spokeswoman for Senate leader Phil Berger, R-Rockingham, declined to comment. A spokeswoman for House Speaker Destin Hall, R-Caldwell, didn’t immediately respond to a request for comment. 

Legislative leaders agreed on income tax rates and raises for state employees in May, but are still working through a series of final issues, including a proposal to finance a $1.7-billion baseball stadium. Lawmakers have discussed closing tax loopholes and exemptions for data centers, some hospitals and affordable housing developers as they seek additional revenue for other priorities.

One change to add revenue: The tax rate on sports betting operators will climb to 23% under the forthcoming budget, which WRAL has previously reported. North Carolina launched online sports betting in March 2024 and operators have paid more than $300 million in taxes on gross wagering revenue at an 18% tax rate.

Operators have warned that beneficiaries of gambling revenue could lose out if taxes are raised on bettors or betting operators and bettors turn elsewhere, even to illegal options, if it becomes more expensive to bet legally in North Carolina.

"This tax hike will only penalize licensed, regulated companies who have delivered hundreds of millions in tax revenue to the state and the UNC System athletic departments,” said the Sports Betting Alliance, a group that represents top operators, in a previous statement to WRAL. “We urge state leaders to instead focus on strengthening the legal framework that protects players, supports jobs, and keeps illegal and unregulated operators out of North Carolina."

Sports bettors would also be able to deduct their losses against their winnings on their state income taxes for the first time under a change in the budget. That change is retroactive to Jan. 1, 2025. Rep. Erin Paré, R-Wake, has pushed for the change, previously calling it an issue of “fairness” and “clarity.” 

The budget also is expected to include a 6% tax on prediction market operators on their net trading fee revenue from North Carolina beginning on Jan. 1. Some sports betting operators have started offering prediction market trades in North Carolina to compete with other markets such as Kalshi and Polymarket.

For UNC and NC State, the additional money comes at a time of soaring costs, in part due to direct revenue-sharing agreements with athletes. 

The schools can share more than $20 million with athletes and have added more scholarships in other sports as the result of the NCAA’s legal settlement. UNC and NC State each reported athletic department deficits in recent years.

Under the previous distribution formula, the first $8.4 million of taxes from sports betting operators was distributed to offset expenses ($500,000), gambling addiction treatment and education programs ($2 million), two statewide youth sports programs ($2 million) and the athletics departments at 13 UNC System schools ($3.9 million total; $300,000 each).

The remaining funds were distributed to the athletics departments at those same 13 UNC System schools (20% divided equally), the NC Major Events, Games and Attractions Fund (30%) and the state’s general fund (50%).

Under the new proposed distribution formula, the first $4.5 million would be distributed to offset costs ($500,000), gambling addiction treatment and education programs ($2 million) and two statewide youth sports programs ($2 million).

The remaining funds would be distributed as follows:

• 2.2% to NCAA Division I schools in the UNC System (up to $400,000 each)
• 19.5% to Division I and Division II schools in the UNC System (up to $2.9 million each).5.7% to Football Bowl Subdivision schools in the UNC System (up to $2.5 million each, to take effect July 1, 2027)
• 30% to the Major Events, Games and Attractions Fund (up to $30 million)
• Remaining money goes to the state’s general fund