Lawmakers in North Carolina have approved an adjustment of the online sports betting tax rate, raising it from 18% to 23%. This revision places North Carolina among the states with the highest sportsbook tax rates in the United States, effective from the upcoming fiscal year starting July 1.

State Senator Jim Burgin announced the updated rate following extensive discussions regarding the financial obligations of sports betting operators. Initially, legislators had deliberated on a tax rate range of 20% to 30%, with proposals in the past suggesting rates as high as 36% and even 50%.

This increase positions North Carolina above New Jersey’s 19.75% taxation, as well as the 20% rates in both Massachusetts and Ohio.

Yet, it remains lower than Pennsylvania’s significant 36% tax rate and the 51% taxation faced by operators in New York, New Hampshire, and Rhode Island. Delaware charges a hefty 50%, while Illinois employs a sliding scale from 20% to 40%.

The tax increase follows a protracted discussion among legislators, despite pushback from sports betting companies and industry advocates, who claimed that elevated taxes might dissuade customers and hinder the viability of the regulated marketplace.

North Carolina House Speaker Destin Hall mentioned that legislators were attempting to align the state with wider industry patterns.

“From our perspective, we aim to align ourselves with what other states are doing. Our goal is to position ourselves at the average level compared to other states regarding these tax rates,” Hall remarked to WRAL earlier this month.

He also noted that lawmakers were being careful about executing significant changes to a market that has shown positive performance since its inception.

“Many ideas are circulating, but we are somewhat cautious about modifying a program that has proven successful for the state,” he stated.

Online sports betting was inaugurated in North Carolina in March 2024, yielding over $1.6 billion in revenue for operators. The state garnered nearly $300 million in taxes under the previous 18% rate.

For the fiscal year 2025/26, North Carolina collected around $133 million from sportsbook taxes. Had the new 23% rate been in effect, the tax revenue for that period could have reached approximately $170 million, resulting in an additional $37 million in revenue.

Organizations like the Sports Betting Alliance and its associated operators have urged locals to contest the hike, cautioning that customers may face consequences in the form of diminished promotions and incentives.

FanDuel highlighted in a communication to customers that legal sports betting contributes to the funding of college athletics throughout the state.

“Legal sports betting is generating tangible revenue for college athletic departments statewide,” the company stated. “A tax increase could jeopardize that funding and negatively impact fans.”

Industry analysts have also indicated that elevated taxes might entice some bettors to turn to offshore sportsbooks if licensed operators limit promotions or raise prices to accommodate increased expenses.