Unlike Ohio, North Carolina still awaits approval of its sports betting bill. It rests in a Senate committee on rules and operations.
The bill calls for a 14 percent tax on online sportsbooks, five points lower than average. It also allows bookmakers to deduct promotional credits given to new bettors in decreasing amounts beginning January 8, 2024 and continuing through January 1, 2027.
It calls for a $1 million licensing fee renewable every five years. HB 347 allows for up to 12 online commercial sportsbooks to open in the state.
The only states charging higher licensing fees are Massachusetts ($5 million), Pennsylvania ($10 million) and New York ($25 million, but legislation has been proposed to raise it to $50 million).
The above states offer much higher tax rates than North Carolina, making the combination of a low tax rate and relatively high licensing fees a moderately-priced product for the nation’s sports betting industry.
Promotions are deals offered by sportsbooks to attract new customers. They come in different formats, from deposit matches to bonus bets. The promotional deductions allow operators to get their business started and to offset some of the cost.
However you slice them, promo deals have developed a reputation for being misleading, almost criminal. But North Carolina will keep a strict eye on the program until it’s paid for in full.
To avoid incurring some of the problems seen in Colorado, North Carolina would phase out promo deductions after the first three years of legal sports betting. The phase-out structure would look like this:
- No limit on the amount of promo deductions claimed until January 8, 2025;
- Up to 2.5 percent of gross gaming revenue can be claimed in promo deductions until December 31, 2025;
- Up to 2 percent of GGR can be claimed in promo deductions until December 31, 2026; then it’s gone
The aforementioned fiscal note on HB 347 predicts that the state’s tax revenues for the next five years show a significant bump from FY 2023-2024 to FY 2024-2025 and then again in the subsequent three years.
Lawmakers predict that the North Carolina sports betting market will mature by year five, settling into a steady-state tax income of $61.6 million, or roughly $5.20 per capita.
