Mobile sports betting should be less than a week away in North Carolina, with the first sportsbooks tentatively scheduled to begin taking wagers on March 11, just in time for the Men’s and Women’s NCAA Basketball Tournaments, which tip off on March 19 and March 20, respectively. Sports betting is a major source of income for the states where it’s legal, and even if you don’t plan on taking part in the pastime, you’re certain to become inundated with promotional offers or see the effects of a multi-billion dollar industry springing up overnight.
North Carolina will become the 31st state to host legal mobile betting, so we already have some idea of how the process will unfold based on what’s happened in other locations: here’s what you should expect to see from the state economy.
Lenient Tax Philosophy…
North Carolina has started to gain a reputation as a swing state in recent years, and the approach that the Tar Heel state’s government takes regarding sports betting is an excellent example of that mercurial nature. Democrat governor Roy Cooper has been a champion of the betting industry since the first retail sports betting locations went live in 2019, but he’s not levying a heavy tax policy like other democratic states have.
New York, for instance, is a traditionally blue state, and they have the steepest tax rate in the nation for betting operators, clocking in at a whopping 51 percent of the total revenue: the average person in the Empire State receives a much kinder—but still heavy—rate that can climb as high as 12.7 percent.
By comparison, North Carolina will charge a paltry 5.25 percent flat rate tax to winning bettors, as is the case for any income earned in the Tar Heel State: betting operators will have to reach deeper into their pockets, with rates at 18 percent of gross gaming revenue, as well as a $1 million licensing fee, which they’ll have to renew every five years.
All in all, the state budget plans for roughly $65 million in tax revenue from sports betting during the first full year of operation, although many industry experts think that prediction errs on the side of caution.
…Leads to a Bigger Betting Handle
While the Tar Heel State’s lenient tax policies may not generate as much revenue as New York, a significant increase in spending is anticipated as both residents and visitors are eager to take advantage of the special FanDuel promo code for North Carolina bettors.
In their first full year of operation, sportsbooks in New York saw roughly $2 billion in the total betting handle. North Carolina projections, on the other hand, go as high as $7 billion. By taking a light handed approach toward taxation, sportsbooks are encouraged to set up shop here because they know that it’s more likely to turn a profit.
When one considers that New York nearly doubles North Carolina in population (19.84 million people to 10.55 million as of 2021), the fact that North Carolina could outpace them by nearly four times really says something.
We see the same tax philosophy play out with the differing tax rates between betting operators and bettors themselves. On one hand, they say that the house always wins, so it makes sense to tax the operators at a higher rate, knowing that Las Vegas’ talent for predicting outcomes and setting the odds accordingly means they’re more likely to win than the consumers are.
On the other hand, the average person would be far less likely to place bets if they knew a winner might only bring in a fraction of the winnings, so low tax rates boost the industry’s success all around.
Paying it Forward
Another interesting factor regarding sports betting is the way that North Carolina legislators hope to promote in-state athletics through the budding industry. Sports betting helps to drive interest in lesser-viewed sports, whether it’s auto racing, golf or esports.
If fans have an opportunity to bet on something, there’s an excellent chance they’re going to take that opportunity, and it makes sense to be informed on the sports you’re placing wagers on.
North Carolina’s budget for this year plans to allocate a portion of the revenue generated from sports betting taxes to the athletic programs of public universities (sorry Duke) in the state. Pay to play exists now more than ever in the era of Name, Image and Likeness deals for college athletes, and so a portion of every bet on the UNC Tar Heels will end up funding their athletic department.
It’s more fun to bet on a winning team than a losing one, so we could see a golden era of North Carolina college sports as the success of the betting industry helps drive the success of those teams.
