WRAL News in Raleigh was the first to announce that the upcoming budget discussions may incorporate adjustments to the revenue share required from sportsbooks.

Presently, sportsbooks are taxed at 18% on their gross revenue, which is approximately an average rate among other states enforcing sports gambling regulations. For instance, New York, Rhode Island, New Hampshire, and Oregon impose the highest tax at 51%, whereas Nevada and Iowa have capped theirs at the lowest rate of 6.75%.

Small Impact of Sports Betting Taxes

North Carolina’s Governor Josh Stein (D) has ambitious initiatives for the 2026–27 fiscal cycle.

The Democratic leader aims to introduce nearly $380 million in tax reductions targeting lower- and middle-income families. Additionally, he is advocating for “much-needed salary increases for state workers and retirees” which would incur an $804 million cost.

Stein is keen on increasing funding directed at public education and child care, providing raises for teachers, $1,500 bonuses, and $300 supply allowances. Furthermore, he is pursuing $40 million for workforce development programs at community colleges, $14 million for apprenticeship initiatives, and a 10% salary hike for public safety and law enforcement personnel.

It’s essential to note that sports betting cannot cover all financial requirements. In reality, contributions from this sector are decidedly minimal.

For the fiscal year 2025 (spanning July 2024 to June 2025), the North Carolina Lottery Commission reported that total tax revenues from retail and online sports betting were under $116.6 million, with oddsmakers processing a total of $6.6 billion in wagers and retaining $647.7 million.

Stein’s proposed budget totals $35.44 billion, reflecting nearly $3 billion in increased spending compared to the previous year.

Increased Taxes, Declining Betting Activity

In states where higher taxes and new fees have been introduced, sportsbooks have been compelled to transfer some costs to consumers, evident through tighter odds, reduced promotions, and diminished customer retention efforts.

For instance, Illinois observed a decline of five million bets during the first month after implementing a per-bet fee. The Sports Betting Alliance, which advocates for major platforms like FanDuel, DraftKings, BetMGM, Fanatics, and bet365, warns that elevated sports betting taxes force bettors towards unscrupulous offshore sportsbooks and local bookies that lack consumer protections and do not contribute to the state’s tax revenue.

All five members of the Sports Betting Alliance are operational in North Carolina and are likely to lobby against any proposed increases to the sports betting tax during budget discussions.

North Carolina’s legislative session for 2026 extends into August, with the General Assembly aiming to finalize the budget by next month.