Budget proposal would double sports-betting tax
The North Carolina Senate’s proposed budget would double the sports-betting tax rate and modify the tax-revenue distribution to universities.
Under the Senate’s budget proposal, North Carolina would jump from 11th to 4th highest in state tax rates for sports betting, doubling the current rate from 18% to 36%, according to Joseph Harris, a fiscal policy analyst at the John Locke Foundation.
“While tax increases typically deter economic activity, resulting in a smaller tax base, increasing the tax rate on sports wagering operators is likely to have a much smaller impact than typical,” Harris told the Carolina Journal. “Sports wagering firms already operate in three states that levy a 51% tax rate, making it improbable that the companies would close shop in North Carolina due to a 36% tax rate. However, we can expect that the sports-wagering operators would attempt to offset the tax increase by cutting costs and/or increasing prices.”
New York, New Hampshire, and Rhode Island are currently tied for first place as the states with the highest tax rate on sports gambling at 51%.
“It is unlikely that increased wagering fees would do much to deter betting due to the addictive nature of gambling,” continued Harris. “As a result, doubling the tax rate on sports wagering operators is likely to nearly double the revenue the state collects from its sports-wagering tax.”
The Senate proposal would also modify the tax-revenue distribution from sports wagering. Under the current law, $8.4 million must be allocated to various entities, including $300,000 to 13 state universities. In addition, 20% of the revenue collected that exceeds $8.4 million is distributed to 13 state universities to support their college athletic departments.
“Specifically, the revision would benefit the universities with the two largest athletic departments: the University of North Carolina at Chapel Hill (UNC) and North Carolina State University (NC State),” concluded Harris. “Under current law, these two universities do not receive sports-wagering tax revenue.”
Under the Senate proposal, the funds would be distributed in the following way: $2 million annually to the Department of Health and Human Services (DHHS), $1 million annually to the North Carolina Youth Outdoor Engagement Commission, $1 million annually to North Carolina Amateur Sports, and $500,000 for administrative costs.
In addition, $500,000 to each of the following institutions: Elizabeth City State University, Fayetteville State University, UNC-Pembroke, and Winston-Salem University; $1 million each to North Carolina A&T State University, North Carolina Central University, UNC-Asheville, UNC Greensboro, UNC Wilmington, and Western Carolina University; and $1.5 million each to Appalachian State University, East Carolina University and UNC-Charlotte.
Of the remaining funds, 20% is to be distributed equally among the following 13 universities: Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina A&T State University, North Carolina Central University, UNC Asheville, UNC Charlotte, UNC Greensboro, UNC Pembroke, UNC Wilmington, Western Carolina University, and Winston-Salem State University.
Between March and November of 2024, these universities received over $17 million in revenue from the sports-betting tax.
According to the budget proposal, 30% will be split annually, with 10% each going to UNC Chapel Hill and North Carolina State University, and the remaining 10% going to the North Carolina Major Events, Games, and Attractions Fund. Any remaining funds not allocated will be credited to the General Fund, as opposed to the 50% allocated to the General Fund under the current law.
During the first year of legalized sports betting in North Carolina, which began on March 1 of 2024, more than $5.5 billion in bets were wagered.
Another change proposed in the budget would require UNC-Chapel Hill and North Carolina State to play more basketball games against every other constituent institution of the University of North Carolina. This only applies to basketball and has not been required for football teams because not every UNC System school has a football team.
Screenshot from budget proposal SB 257, pg 161.
No Byline Policy
Editorial Guidelines
Corrections Policy
Source