Digital Wager Wire highlights the most significant events affecting the domestic and international sports betting and gaming industries each week throughout the year.
Raising the Rent
North Carolina legislators are ripping a page out of other states’ playbooks when it comes to tax increases on mobile sportsbooks. The Tar Heel State launched its mobile sports betting industry on March 11, 2024, at a tax rate of 18% on gross revenues.
Since that launch, North Carolina has collected in excess of $287 million, a fraction of which came from the state’s three retail tribal sportsbooks. Last year, the North Carolina House and Senate could not reach a compromise on a measure that would have increased that rate to 36%, but negotiations are again underway for a significant increase.
If the rate had been 30% since the launch, North Carolina would have collected an additional $200 million in taxes based on a handle of roughly $14 billion over the two-plus years sports betting has been in operation. According to reports, lawmakers are considering an increase that will likely land between 20% and 30% of the sports betting revenues.
The state is attempting to bridge a budget deficit in which half of the sports betting taxes collected are earmarked for the General Fund, with the other half being allocated to the 13 state system schools’ athletic departments, youth sports, and problem gambling resources.
Industry Pushback
The Sports Betting Alliance (SBA), an industry trade group representing bet365, BetMGM, DraftKings, Fanatics, and FanDuel, took issue with the increase. Currently, the state has the SBA’s five members plus Caesars Sportsbook, Underdog Sports, and theScore Bet (formerly ESPN Bet) licensed to operate.
“When states raise taxes, the costs get passed down to customers — directly hitting your wallet,” read a statement on the SBA’s webpage. “It punishes NC sports fans who play by the rules and pushes more people toward illegal offshore sites with no consumer protections.”
The alarming increase in taxes on mobile sportsbooks has even attracted the attention of some state authorities, including Louisiana Gaming Control Board Chairman Christopher Hebert, whose legislators approved an increase from 15% to 21.5% last year.
“We really have to be careful. “The original proposal was a tax increase to 50%. We knew that was never going to happen. You would lose operators because the cost of doing business just isn’t worth it,” stated Hebert.
