Raleigh, N.C. — Sports bettors in North Carolina could be placing legal online wagers as early as this football season if state lawmakers pass a bill in the new legislative session.
Senate Bill 688 passed a divided North Carolina Senate last year and the bill’s backers say the legislation has enough support to pass the House during the state’s even-year “short” session, which began Wednesday. Gov. Roy Cooper has indicated in the past that he would sign legislation legalizing online sports gambling.
“We just want to make sure we have drummed up the votes, and I think we have,” state Sen. Paul Lowe, D-Forsyth, the bill’s sponsor, said in an interview with WRAL News. “I feel confident about it.”
Sports gambling is currently legal in North Carolina, but only at the two Cherokee casinos in the far western part of the state. The legislation would allow for up to 12 online sports gambling operators to take mobile wagers from users located in the state. North Carolina would join a growing list of states to legalize widespread sports gambling after a 2018 U.S. Supreme Court decision opened the door for state-by-state decisions.
About half of U.S. states have legalized online sports gambling, including southeastern states such as Virginia, Tennessee, West Virginia, Maryland and the District of Columbia. Kansas became the latest state to approve mobile sports betting earlier this month.
“We’re ready to rock ‘n’ roll. I’ve not heard any new opposition,” state Rep. Jason Saine, R-Lincoln, an advocate of the bill, told WRAL News. “I think we have a pretty smooth glide path once we do kind of start rolling into session.”
Big bucks and support
Legalized sports betting has majority support across North Carolina, according to WRAL News poll results released in April. About 52% of respondents said sports gambling, including online gambling, should be legalized in the state. Support hit or topped 50% among Republicans, Democrats and unaffiliated voters. Twenty-eight percent said widespread sports betting should remain against the law. Another 19% said they weren’t sure.
Supporters say approval will enable the state to capture millions of dollars in gambling-related revenue each year and reduce the use of unregulated, off-shore sites. “When individuals see other companies that are doing the same thing and doing it in our state, and we’re not getting any revenue from it, a light bulb kind of goes off,” Lowe said. “People are doing this anyway.”
He mentioned the number of sports gambling advertisements played throughout major sporting events, such as the Super Bowl and the NBA playoffs, offering legal betting in other states. Many of the sports wagering operators are partnered with sports leagues, teams and venues.
“That’s a lot of lost revenue that our citizens are participating with,” he said, “and we’re getting nothing out of it and some of those [offshore] sites are not safe,” he said.
Social conservatives at the statehouse have pushed back against the proposal, saying it will cause an increase in gambling addiction and hurt society and families. Some Democrats are opposed to additional gambling in the state as well, concerned about its impacts on low-income residents and college athletics.
For a state with a $25 billion annual budget, the revenue from sports gambling likely won’t be a game-changer. Tennessee, a state like North Carolina that has professional sports franchises in the NBA, NHL and NFL and popular college teams, collected $4.6 million in taxes in March off $370 million in sports wagers, according to the Tennessee Sports Wagering Advisory Council. The sports books made $22.7 million in adjusted gross income during the month.
Virginia legalized online sports gambling in January 2021. It has since collected $26.7 million in taxes. Twelve companies can take sports bets in Virginia, but only five have paid taxes because the state, like Tennessee’s law and North Carolina’s proposed legislation, allows companies to write off some expenses, including promotional and credit expenses to reach its adjusted gross income total.
Potential changes to sports betting bill
Under the bill, sports bets would be allowed on professional sports, college sports, electronic sports and amateur sports like those at the Olympics. Betting on youth sports, such as high school games and horse racing would not be allowed under the current legislation.
Operators would pay $500,000 for a five-year license, which can be renewed for $100,000. The Lottery Commission would oversee sports gambling in the state. The legislation calls for an 8% tax on operators’ adjusted gross revenue, which allows for the deduction of certain expenses, including promotional credits, from the total gross revenue.
Both the license fee and the tax rate are low compared to other states. Illinois, for example, has a $20 million fee and a $1 million renewal fee every four years. Pennsylvania charges a $10 million license fee with $250,000 for renewals. New York taxes operators at 51%. Virginia taxes adjusted gross revenue at 15%. During a committee hearing in November, some North Carolina lawmakers asked if the tax rate could be raised.
Saine said the House will pass the same exact bill that passed the Senate, which passed the bill 26-19 with more Republicans voting no than yes on it. Once that passes, lawmakers could attempt to pass a second bill doubling the license fee, raising the tax rate to 14% and making several other technical changes to the bill.
“No sense in reliving the wounds that may be there. It will make it or not make it on the House side the way the Senate sent it to us,” Saine said. “Based on the conversations I’ve had with other members, they seem OK with that approach.”
Said Lowe: “Once we pass this bill, there’s some tweaks we’re going to do. But right now we’re just trying to get it out of the chute.”
Where will the tax money go
Under the current legislation, half of the tax collected would go to a newly created North Carolina Major Events, Games, and Attractions Fund administered by the North Carolina Department of Commerce.
The fund can be used to provide grants to major events that chose a site within North Carolina — after considering multiple sites outside of the state — to host an event held not more than once a year. The legislation defines the events as “entertainment, musical, political, sporting or theatrical” and says they must be held at a sports facility or sponsored by a major golf association.
The state Lottery Commission would also give $1 million per year to the state Department of Health and Human Services for gambling addiction education and treatment programs.
Lowe said he wants some of the money to be used for education.
“Education, education. Plain and simple,” he said. “Certainly we want to do all we can for K-12. I’m still concerned about things like Head Start, still concerned about higher ed. When we say education, we have to look at the whole gamut, teachers. Community colleges even need some help so they can compete.”
The state’s three major professional sports teams — the Carolina Hurricanes, the Carolina Panthers and the Charlotte Hornets — back the legislation. They, along with Charlotte Motor Speedway and others, could stand to benefit from the bill since the owner or operator of a sports facility that hosts professional sports and has a capacity of at least 17,000 people (or hosts a professional golf tournament with more than 50,000 live spectators), can open a sports lounge near its venue. Customers would still have to place their bets electronically, but the facilities could be a way to attract sports fans to venues that might otherwise be unoccupied for much of the year.
“I feel very confident it’s going to pass early in the session,” said Ches McDowell, a lobbyist for the Hornets who worked on the legislation.
If the legislation passes that quickly, it could be several months before bettors can begin creating accounts with mobile operators and placing bets.
“It’s conceivable, if not by the first of football season, certainly by mid-season,” Saine said. “There might be a couple games already played, but I do think everyone who is involved in it has known something might be coming. It’s not a shock to anyone.”