On March 11, 2024, North Carolina officially launched online sports betting, marking a significant change for the state’s gambling industry. The response was overwhelming – bettors wagered over $5.4 billion in just ten months, making sports betting a major source of revenue for both sportsbooks and the state government.

However, despite this success, a tax-related controversy has emerged. Under current North Carolina gambling tax laws, bettors are required to pay income tax on their total winnings, even if they ended the year with net losses. This has led to frustration among bettors and calls for legislative change.

House Bill 14 was introduced to allow gamblers to deduct their losses, aligning North Carolina with federal tax regulations and most other states where sports betting is legal. The debate over the bill continues, as lawmakers weigh the potential impact on state tax revenue against the fairness of the current system.

North Carolina’s first year of legalized online sports betting saw tremendous activity. Here are some key figures that highlight the industry’s rapid growth:

The last three months of the year saw particularly high betting activity, with each month exceeding $600 million in total handle. November saw $657.7 million in bets placed, while October and December also contributed significantly to the total. These strong figures indicate that sports betting has been widely embraced by North Carolinians.

While the state collected over $105 million in tax revenue, fluctuations in sportsbook profitability raised concerns. Some months, like December, saw bettors winning more than expected, which directly impacted tax revenue for the state.

December 2024 was a crucial month for North Carolina sports betting, raising discussions about the state’s taxation policy. Let’s break down the numbers:

In December, bettors won back most of their money, leaving sportsbooks with a 5.67% hold rate, the lowest since legalization. While this was beneficial for gamblers, it led to lower tax revenue for the state. The discrepancy between high betting activity and lower tax collections has fueled discussions about the fairness of the current tax system.

Under the existing law, bettors still owe taxes on their total winnings, regardless of their overall losses. This has added weight to discussions on tax reform, including the push for House Bill 14.

House Bill 14 was introduced to address the concerns surrounding North Carolina’s sports betting tax laws. Currently, bettors are taxed on their total winnings, even if they lost more than they won throughout the year. This bill aims to adjust that policy.

If House Bill 14 is passed, the taxation of North Carolina online betting winnings would change significantly.

North Carolina’s first year of online sports betting has been a success in terms of participation and revenue. However, the state’s tax policy has become a point of contention, particularly in months like December, where bettors saw high payouts but still owed taxes on gross winnings.

House Bill 14 presents a critical decision for lawmakers:

Ultimately, the decision comes down to whether North Carolina wants to follow in the footsteps of most other states or maintain its current approach of taxing gross winnings. The outcome of this bill could shape the long-term future of North Carolina’s sports betting industry.