North Carolina Lawmakers Agree to Raise Sports Betting Tax Rate in State Budget

North Carolina lawmakers have reached a tentative agreement to raise the state’s sports betting tax rate as part of ongoing budget negotiations, according to people familiar with the discussions. The state currently collects 18 percent of gross wagering revenue from its eight licensed and regulated online sportsbook operators, but legislators are now seeking a higher rate to help cover broader budget priorities.

The state has collected more than $287 million in sports betting tax revenue since online wagering launched in March 2024, far exceeding initial projections. That strong performance has made sports betting an attractive target for lawmakers looking for additional revenue streams.

What the Numbers Look Like

People familiar with the negotiations told WRAL News that discussions have centered on a possible rate somewhere between 20 and 30 percent, with a tentative figure reached at the lower end of that range. The figures remain subject to change as legislators finalize the broader spending plan, and the industry is expected to push back against any significant increase.

North Carolina House budget writer Donny Lambeth confirmed that the chambers had agreed to raise the rate but declined to provide specifics. The agreement comes after the two chambers staked out very different positions last year: the state Senate passed a budget that would have pushed the rate as high as 36 percent, while the House version kept it at 18 percent.

A tax rate near 20 percent would keep North Carolina relatively competitive with neighboring markets, while anything approaching 30 percent would be among the higher rates in the country. For comparison, New York taxes online sportsbook revenue at 51 percent, Illinois at 40 percent for the highest-revenue operators, and neighboring Tennessee at 20 percent.

Industry Reaction and What Comes Next

Major sportsbook operators including FanDuel, DraftKings, and BetMGM are active in North Carolina and are expected to lobby against substantial increases. Higher tax rates can ultimately affect the competitiveness of promotional offers, bonus structures, and odds available to bettors, as operators pass increased costs along through tighter margins.

The state has eight legal online sportsbooks serving North Carolina residents, all regulated by the North Carolina State Lottery Commission. The market launched to significant fanfare in March 2024, benefiting from a large population of sports fans and substantial interest in Carolina Panthers, Charlotte Hornets, and Carolina Hurricanes betting. The Hurricanes’ ongoing Stanley Cup Final appearance against the Vegas Golden Knights has helped sustain bettor interest well into the spring.

Any final agreement on the tax rate will need to survive further budget negotiations before becoming law. The timeline for a final budget vote remains unclear, but the two chambers appearing to agree on the principle of a tax increase makes some form of rate hike likely. Operators will have limited leverage once a bipartisan consensus solidifies around a specific number.

North Carolina becomes the latest state to revisit sports betting tax rates after Illinois last year implemented a tiered structure that pushed the highest-earning operators to a 40 percent effective rate. Several other states are watching these experiments closely as they evaluate their own revenue needs.