North Carolina lawmakers have approved an increase to the state’s online sportsbook tax rate, marking a major adjustment to its regulated betting market less than three years after launch. The change aims to generate additional revenue for North Carolina, but it places the state among the higher-tax jurisdictions for online sports betting.
North Carolina has officially approved a 23% tax on online sportsbook revenue, replacing the previous 18% rate. Sen. Jim Burgin confirmed the increase, which follows weeks of negotiations over a higher tax rate after lawmakers reportedly considered a range between 20% and 30%.
The new rate resolves a lengthy legislative debate despite objections from sportsbook operators, who argued that a larger tax burden could affect the market.
With the change, North Carolina now taxes online sportsbooks at a higher rate than New Jersey (19.75%), Massachusetts (20%), and Ohio (20%). However, it still trails states like Pennsylvania (36%). It’s also lower than Illinois, which ranges between 20% and 40%, depending on operator revenue.
The tax increase can affect sports bettors, since this could influence how operators compete in the market over time.
To help offset higher operating costs, sportsbooks could scale back promotional offers that can entice players to join their sites. Operators may also become more selective with ongoing promotions or adjust pricing in certain markets. This would make these betting sites a bit less appealing.
With a higher tax rate and a less favorable betting environment, the risk is that players could be influenced to join offshore sportsbooks, which don’t have the same consumer protections in place, making them a risk to player safety.
The good news for Carolina sports betting is that the tax increase isn’t as large as once discussed, as they had previously tried to get it closer to 30%.
North Carolina currently has a competitive online sports betting market with eight licensed operators available statewide. Bettors can choose from major brands, including FanDuel, DraftKings, BetMGM, Caesars Sportsbook, bet365, and Fanatics Sportsbook.
However, with the market dominated by FanDuel and DraftKings, there’s risk that the higher tax rate could cause other sportsbooks to reconsider their operations within North Carolina. This is especially true for sportsbooks with a smaller market share within the state, like bet365.
It remains to be seen how these changes will truly affect North Carolina sports betting.
The tax increase will take time to reshape North Carolina sports betting market, but it will be an important development to watch as operators adjust to the new financial landscape.
Going forward, the key question is whether operators absorb the additional expense or gradually pass some of those costs on through fewer promotions, less competitive odds, or other changes to their products.
If North Carolina continues to post healthy betting volumes, the state could become a case study for how higher tax rates affect a relatively new and competitive online sports betting market.
