On Monday, March 11, North Carolina online sports betting will launch with an initial eight operators in the state. Fiscal estimates show that North Carolina could bring in nearly $100 million in sports betting tax revenue by its fifth full year of operation.
What will that tax revenue benefit and will it place North Carolina as one of the top sports betting markets in the country?
North Carolina sports betting may not be a top 10 market
Fiscal estimates for HB 347, the bill that legalizes online sports betting in state, show that North Carolina will likely bring in more than $64 million in sports betting tax revenue for FY 2024-25, and then increase every year thereafter.
Here are the sports betting tax revenue estimates for the state’s first five years of operation:
- FY 2023-24: $0
- FY 2024-25: $64.6 million
- FY 2025-26: $83.5 million
- FY 2026-27: $96.3 million
- FY 2027-28: $100.6 million
Licensing fees will also come into play for the state’s first year of operation, with estimates showing more than $10 million total to North Carolina. Each sports betting operator license costs $1 million to hold while service provider licenses costs $50,000 and sports wagering supplier licenses cost $30,000.
So where would this put North Carolina in terms of U.S. sports betting markets?
According to the American Gaming Association’s recent release of the top-10 highest revenue driving states for 2023, if the North Carolina estimates stay true the state would not find itself among the top markets in the country.
New York sits atop the list as it produced more than $1.6 billion in sports betting tax revenue, followed closely by New Jersey’s total of $1.06 billion. Nevada rounded out the top-10 in the final spot with more than $481 million in revenue.
Related content: Offers from operators like DraftKings North Carolina and bet365 North Carolina are expected to arrive next month.
If the fiscal estimates remain true in the sports betting bill, North Carolina would have difficulty cracking the top-10 sports betting markets in the country. That being said, estimates show the state could bring in more than $3.9 billion in retail sports betting and online sports betting handle for its first year of operation and potentially seen an increase to $6.6 billion by its third year.
Where does NC sports betting tax revenue go?
With millions in tax revenue coming into the state, where will the money go? North Carolina legislators have earmarked the revenue mainly for higher educational purposes and youth athletics in the state.
The North Carolina Department of Revenue will retain $0.5 million of tax revenue each year to offset the cost of collecting taxes, and the Lottery Commission will be reimbursed for any expenses not covered by fee revenue. After these costs are covered, the remaining tax revenues will be distributed as follows:
- $2 million to the Department of Health and Human services for gambling addiction education and treatment programs
- $1 million to North Carolina Amateur Sports for local governments or nonprofits for youth sports equipment or facility upgrades
- $300,000 each to the 13 University of North Carolina constituent institutions to support college athletic departments
- $1 million to the North Carolina Outdoor Heritage Advisory Council for grants to assist sports teams with travel expense and incentive grant to attract sports events for nonprofessional athletes
The colleges eligible to receive the $300,000 are Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina Agricultural & Technical State University, North Carolina Central University, University of North Carolina at Asheville, University of North Carolina at Charlotte, University of North Carolina at Greensboro, University of North Carolina at Pembroke, University of North Carolina at Wilmington, Western Carolina University, and Winston-Salem State University.
If any sports betting tax revenue remains, it will be distributed three other ways:
- 20% distributed equally among the 13 UNC colleges noted above to support their athletic departments
- 30% to the North Carolina Major Events, Games, and Attractions Fun
- 50% to the general fund
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