North Carolina is set to introduce online sports betting in less than three weeks, which is expected to bring in millions of tax dollars for the state.
But how much tax money is the state expecting specifically? And what will happen to this money?
By its fifth full year of operation, North Carolina’s sports betting tax revenue may reach around $100 million, according to fiscal estimates. The majority of this money would go toward funding youth sports, higher education, and the state general budget.
In North Carolina, lawmakers must evaluate a financial assessment of every proposed bill. According to fiscal predictions for HB 347, the legislation that authorized online sports betting in North Carolina, the Tar Heel state should start collecting taxes in its second year at a rate of about $64 million. For FY 2023–2024, no tax revenue is anticipated; nevertheless, the state is expected to receive millions in licensing fees—more than $10 million in total.
The online sports betting tax rate in North Carolina is established by lawmakers at 18% of total sports betting revenue.
A sports betting supplier license costs $30,000, a service provider license costs $50,000, and an operator license costs $1 million. At least nine permits are anticipated to be granted by the state.
So far, the Lottery Commission has granted two complete supplier licenses, each of which costs $30,000. There have also been 14 other temporary supplier licenses granted, each of which costs $30,000 to maintain. In total, supplier license fees will bring in $480,000 for North Carolina.
Consequently, the state will get close to $10 million for the licenses that have been and will probably be granted to suppliers and operators, even though no tax revenue is anticipated for the first fiscal year.
However, what can the state anticipate in the upcoming years? The estimated revenue from the sports betting tax for the first five years of the state’s existence is as follows:
The projections appear to be rather accurate when compared to a state of comparable size, like Virginia. In its second full year of operation, Virginia, which legalized sports betting in 2021 and levied a 15% tax on it, most recently recorded $67 million in income in FY 2023.
The $83.5 million revenue prediction for its second full year may be accurate because North Carolina will tax sports betting at a higher rate than Virginia and has a little larger population.
So where precisely would the millions of tax funds collected from sports betting by the state end up? The majority of tax money from sports betting in North Carolina will go toward subsidizing youth sports, higher education, and the state general budget.
The Lottery Commission will be compensated for any costs not met by fee revenue, and the North Carolina Department of Revenue will keep $0.5 million in tax receipts annually to offset the cost of tax collection. Following the payment of these expenses, the remaining tax income will be allocated as follows:
