North Carolina Shatters Sports Betting Expectations

The first year of mobile and retail sports betting in North Carolina is in the books, and tax revenues far exceeded expectations, more than doubling projections.

Tax Windfall

After much debate, North Carolina legislators eventually approved mobile and retail sports betting, with the industry launching on March 11, 2024. The initial projections revealed North Carolina would receive approximately $60 million in the first year from the nascent industry, but that proved to be exceptionally conservative.

After one year, North Carolinians wagered $6.1 billion, with the state’s tax coffers receiving more than double the amount projected. Industry analyst Steve Bittenbender put it into perspective. “The first year of North Carolina sports betting has been wildly successful,” said Bittenbender. “They were saying this was going to bring about 60, 65 million into the state,” Bittenbender explained. “You’ve already got about 117 million in tax dollars [through January] already in, so you’re looking at basically double what was forecasted.”

Still a Strong Showing

Despite the Super Bowl generating plenty of activity, February was a decidedly slower month than January. Over $543.4 million was wagered, an impressive handle compared to many other states but 16% lower than the $646.9 million handle registered in January when the NFL and college football were still filling the sports calendar.

February’s revenue report revealed that of that $543.4 million wagered, sportsbooks combined for $55.6 million courtesy of a 10.2% hold, sending over $10 million to the taxman. It was only the second time North Carolina sportsbooks have delivered back-to-back months of $50 million or more in revenues, with January producing $74.5 million on an impressive 11.5% hold.

Overall, the eight North Carolina sportsbook platforms, including FanDuel, DraftKings, BetMGM, ESPN BET, Caesars, bet365, Fanatics Sportsbook, and Underdog Sports, generated more than $700 million in gross revenue after the first full year, with the state collecting over $123 million in taxes from those proceeds.

Losing Proposition

North Carolina did many things right before launching sports betting, and the impressive first-year results are undeniable proof of just that. However, one glaring omission that will soon become evident to North Carolina bettors around tax time is the lack of a provision allowing deductions for gambling losses.

Currently, gross yearly profits on sports betting are taxed at 4.5% with no mention of deducting losses in the state’s tax code. Therefore, a North Carolinian who may have won $5000 in total bets throughout 2024 but placed $5000 in losing bets would have a net profit of zero. However, in the eyes of North Carolina’s tax code, that same person would pay $225 in state income tax, while virtually all other states would levy no taxes under that scenario.

Enter Representative Erin Pare, who is not a proponent of sports betting but is an advocate of fair taxation, sponsored House Bill 14 to remedy what many believe is an injustice. “Unlike federal law and unlike the majority of other states that have legal sports betting, North Carolina does not allow gambling losses to be deducted, capped at winnings on the state tax return,” explained Pare.