North Carolina’s initial excitement over legalized sports betting is beginning to fade, as bettors are now set to feel the impact of a higher tax rate on their wagers.

WRAL News sports reporter Brian Murphy reported that North Carolina lawmakers have agreed to raise the tax on online sports betting revenue by 5 percentage points, increasing it from 18% to 23%.

State Sen. Jim Burgin (R-Lee, Harnett) confirmed the 23% rate to Murphy, although he had pushed for a much larger increase to 50%. With the rate set at 23%, the state is expected to see only a relatively modest increase in revenue from taxing sportsbook earnings.

Even after the increase, North Carolina’s sports betting tax rate will remain broadly comparable to the national average among the more than 30 states that tax commercial sportsbooks.

Modest Financial Impact

The General Assembly is looking for additional revenue as it considers roughly $3 billion in higher spending proposed by Gov. Josh Stein (D). Sports betting has emerged as one potential source of additional funds during budget negotiations, but the industry generates much smaller profit margins than gambling operations such as slot machines. As a result, the tax increase is unlikely to make a significant dent in the state’s broader budget needs.

During fiscal year 2025, which ran from July 2024 through June 2025, North Carolina’s online sportsbooks generated $647.7 million in gross revenue. Under the existing 18% tax rate, the state collected approximately $116.6 million. At the proposed 23% rate, that amount would rise to about $148.9 million—an increase of roughly $32.3 million.

The budget that Stein has presented to legislators for 2025-27 is a $68 billion expenditure plan centered on public education, childcare, workforce development, and tax relief aimed at lower- and middle-income families. He proposes allocating approximately $2.3 billion to enhance support for educators, which includes average salary increases of 11% and annual stipends of $300 for school supplies.

Stein also recommends salary increases of up to 15% for law enforcement personnel, correctional officers, and first responders, along with a plan to fully finance Medicaid to ensure coverage for over three million residents of North Carolina, and a $448 million investment in job training, apprenticeship programs, and workforce housing.

Concerns have arisen about the potential for consumers to bear the burden of the state’s increased taxes.

"When states raise taxes, the costs get passed down to customers — directly hitting your wallet. It punishes NC sports fans who play by the rules and pushes more people toward illegal offshore sites with no consumer protections,” the Sports Betting Alliance wrote in a campaign encouraging North Carolinians to write their lawmakers telling them to oppose a tax hike on sportsbooks.

When sportsbook revenues are tightened, some argue that bettors experience reduced odds and less motivation compared to states with lower taxes on sports betting. Taxed and regulated sportsbooks assert they face a competitive disadvantage against prediction markets, federally regulated trading platforms that currently provide sports betting.