The online sports betting segment is expected to go live in North Carolina by the end of the second quarter of this year, exactly a year after Governor Roy Cooper signed HB 347 into law in June last year. However, uncertainty continues to loom over the official launch date of the promising new market. Meanwhile, the North Carolina State Lottery Commission, which regulates all forms of gambling activity in the state, had set an initial deadline for sports betting permit applications as operators were given time until Dec. 27, 2023, to apply.
DraftKings, FanDuel, and BetMGM were amongst the seven online sportsbook operators who applied for a license before the deadline. The state’s regulator will allegedly keep at least 11 more vacant spots for the next draft of license applications. As the online gambling segment has recorded substantial growth in almost all regulated jurisdictions, many operators will eye the vacant spot and aim to expand their respective operations. Apart from the aforementioned sportsbook giants, Bet365, ESPN Bet, Fanatics, and Underdog Sports have also applied.
Before the legalization of the online sports betting segment, bettors could legally gamble only at tribal casinos. As the digital era of gaming gained momentum, players started switching to online and mobile betting platforms. People within the state of North Carolina could download these applications, but the location-tracking software disallowed them to place any bets from the jurisdiction. Now that HB 347 has been signed into law, North Carolinians will finally be able to place bets on the platforms of licensed sportsbook operators as soon as the market goes live.
The Regulator Has Enforced a 60-Day Review Window
The seven sportsbook operators who have applied for sports betting licenses in North Carolina are yet to receive their respective permits. The application and issuance process for gambling licenses in every regulated jurisdiction is strict and lengthy. Similarly, the North Carolina State Lottery Commission will also take its time to analyze the applicants and their respective offerings and check if they comply with all of the state’s prerequisites.
If there are any discrepancies, the state’s regulator will notify the operator and grant a 10-day window to change things that have been flagged. As the inspection and issuance process goes on, the regulator will simultaneously focus on finalizing the date on which the sports betting segment will go live in its jurisdiction. The committee is expected to meet on Jan. 4, while the full commission meeting is tentatively scheduled for Jan. 11.
During the previous meetings, the regulators had advised that the final date could be announced after all sportsbook operators filed their applications. Now that the process is complete, the operators and the North Carolinians may receive the go-live date by the third week of January. The sports betting law will kick in on Jan. 8, and the estimated go-live date for the North Carolinian sports betting segment is June 15.
The Taxation Rate of the Jurisdiction
Once the online sports betting market goes live, all wagers will involve real money, and that means that all winnings will be considered as cash profit. The state and federal governments categorize such profit under taxable income, so all players will be liable to pay part of their winnings as taxes. The state government will reportedly levy a tax of 5.25 percent on the winnings. The same rate applies to all taxable income of individuals residing in North Carolina.
As for the operators, the license fee will not be cheap and will cost them $1 million. In addition, a 14 percent privilege tax will be levied on the Net Gambling Revenue (NGR) of each licensed operator. Under Bill 347, the state of North Carolina will allow unlimited deductions for the cash value of promotional credits or bonuses till the end of next year. From the start of 2026, these deductions will be phased out.
Utilization of the Taxes Has Been Publicized
Considering the lowest tax revenue projection, the state of North Carolina will collect about $13 million by the end of 2024. The authorities will divide the total funds into four major parts. A sum of $2 million will be earmarked for the state’s Department of Health and Human Services. The fund will be utilized for gambling addiction education and treatment programs. The second part will be worth $1 million and will go to the NC Division of Parks and Recreation. Each county will receive grants worth $10,000 to upgrade its youth sports equipment and other facilities.
The third chunk will be worth $2.1 million and will be allocated to multiple North Carolina Universities, including Elizabeth City State University, North Carolina Central University, and more. Each selected university will receive $300,000, and the sum will be utilized to support their respective collegiate athletics departments. The fourth part will be reserved for the NC Outdoor Heritage Advisory Council and will amount to $1 million.
Every sports team from every county that needs travel assistance will receive $5,000, and $25,000 will be used to secure regional, state, and national sporting contests and tournaments for non-professional athletes.
Most of the Remaining Taxation Revenue Will Go to the General Fund
After these four allocations, the remaining $6 million will be divided into three parts. The biggest part, which will be 60 percent of the remaining amount, will go directly to the General Fund.
The North Carolina Major Events, Games, and Attractions Fund will receive 30 percent, while the remaining 10 percent will go to selected institutions running under the University of North Carolina (UNC) System.