North Carolina Sports Betting Tax Rates: Everything You Need to Know

In a monumental moment for Tar Heel State sports fans, legal mobile sports betting in North Carolina goes live on March 11 at 12 p.m.

Winning is exhilarating, but it’s not the end of the bet. In North Carolina, gambling winnings are taxable by the state and the Internal Revenue Service (IRS). We’re here to help you learn the North Carolina sports betting tax rates and how they impact you as a bettor.

Review the latest North Carolina gambling resources, and bookmark this page for all your North Carolina sports betting taxation questions.

North Carolina Sports Betting Tax Rates

There are two North Carolina sports betting tax rates to consider: one for individuals’ gambling winnings and one for sportsbook operator revenue.

Let’s take a look at what each one means for NC bettors.

What is the Tax Rate For Gambling Winnings in NC?

Under North Carolina’s sports betting legislation, House Bill 347, the sports betting tax rate for state income tax in North Carolina is 5.25% for individuals.

So, you must pay the state a flat 5.25% tax on your winnings (with losses deducted) at mobile NC betting apps, the North Carolina Education Lottery, and retail casinos.

What is the North Carolina Sports Betting Tax Rate for Operators?

The NC sports betting tax rate for sportsbook operators is 18% of gross gaming revenue (GGR). GGR is the total revenue that a gambling company generates from wagers. The House proposed a 14% tax rate, but the Senate raised it to 18%.

According to the North Carolina General Assembly, GGR is defined as the “total of amounts received by an interactive sports wagering operator from sports wagers as authorized under this Article less the amounts paid as winnings before any deductions for expenses, fees, or taxes.”

North Carolina Sports Betting Tax Expectations

State and federal governments consider sports betting winnings profitable and are, therefore, eligible to be taxed if they hit a certain threshold.

For North Carolina’s sports betting tax projections, the NC General Assembly’s Fiscal Research Division estimates sportsbooks will generate $64.6 million in tax revenue for the state during the first year of legal online betting. This number is expected to rise to $100.6 million by the fourth year.

If you have any questions about sports betting taxes in North Carolina, be sure to consult a tax professional regarding the applications of promos, bonuses, earnings, and losses.

Paying Taxes on Your Sports Betting Winnings

Bettors who win money on legal sportsbook apps in North Carolina can expect to receive a W-2G form from the sportsbook operator at the end of each fiscal year. It’s the same process as obtaining a 1099 or W-2 and should be applied to tax preparation and accounting.

Bettors are responsible for acquiring the proper forms if, for some reason, one doesn’t arrive from each sportsbook operator.

Some key details of taxation of sports betting winnings in North Carolina:

  • You must declare with the North Carolina Department of Revenue.
  • You must declare with the Internal Revenue Service.
  • Gambling losses can be deducted from gambling winnings.
  • Net losses cannot be deducted from other income.
  • Losses cannot be applied to any other fiscal year.
  • Benefits from promo codes and bonus offers count as taxable income.

North Carolina State Tax

The state of North Carolina currently taxes income at a flat rate of 5.25%.

That applies to sports betting revenue as it would to salary or stock earnings. You can add all earnings together for a fiscal year and apply the 5.25% tax rate.

This may seem unreasonable compared to Tennessee and Wyoming, two states that don’t tax legal online sports betting winnings at all. But it looks like a better deal than New Jersey, which takes 10.5%.

North Carolina sports bettors will generally use tax form D-400 to file their state income taxes on sports betting winnings. You should include winnings in the section for adjusted federal income on Line 6.

Federal Tax

North Carolina sports bettors who profit in a fiscal year must declare the figure as taxable income with state and federal taxing authorities. Keep track of your sports betting activity on every app you use, and be prepared to report your winnings.

Sports betting winnings will be added to the bettor’s income and taxed at the appropriate rate for their bracket.

Sports betting winnings should be included under “Other Income” on Line 8 of the standard 1040 IRS form. For those using tax accounting software, users will generally be prompted to account for gambling income with other potential sources.

Bills Regarding Sports Betting Tax in North Carolina

House Bill 347: The bill signed into law legalizing sports betting in North Carolina. It dictates that sports betting winnings are taxed as income at 5.25%.

HB347 became law when Gov. Roy Cooper signed it on June 14, 2023. It will become effective when legal sports betting begins in North Carolina on March 11, 2024.

NC-sports-betting-taxes

Who Benefits From North Carolina Sports Betting Tax?

North Carolina sports betting law requires that tax revenue generated in the state goes to the following:

  • Responsible gambling programs: The North Carolina Department of Health and Human Services will receive $2 million yearly for gambling addiction and treatment programs.
  • Youth sports: North Carolina Amateur Sports will reap $1 million yearly for the purchase of youth sports equipment and/or the upgrading of facilities.

College athletics departments: Thirteen state universities will receive $300,000 each to support their athletic department programs. They include 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.

  • North Carolina Youth Outdoor Engagement Commission grants: The NCYOEG will grant up to $5,000 to assist in-state teams in traveling to sporting events. It will also dangle up to $25,000 to teams for tournaments in North Carolina.
  • If there’s extra: 50% will go to the state general fund, 30% to North Carolina Major Events, Games and Attractions Fund, and 20% to the 13 universities receiving subsidies, divided equally.

North Carolina Sports Betting Tax Rates FAQ

You'll be taxed at a 5.25% rate on gambling winnings. Sportsbooks should send you a W-2G (as in gambling) for your tax preparation. You're also taxed on winnings at tribal casinos and the North Carolina Education Lottery.
Yes, the total will be added to your Internal Revenue Service tax form as "Other Income" and taxed according to your income bracket.
Legal online sports betting apps will launch in North Carolina on March 11, 2024, at 12 p.m. Some sportsbooks will also offer pre-registration deals, allowing you to sign up on March 1.
You can subtract your losses from your winnings and will be taxed on that figure. You cannot subtract losses from your other income or roll over the losses to another year.
Licensed sportsbook operators in North Carolina will be taxed at 18% on gross gaming revenue. This figure is roughly in the middle of the national extremes.
If you fail to pay taxes on sports betting winnings, you could be audited, fined, and prosecuted for avoiding your fair tax burden.
About the Author
Brant James

Brant James

Senior Writer
Brant James is a senior writer who covers the sports betting industry and legislation at Gaming Today. An alum of the Tampa Bay Times, ESPN.com, espnW, SI.com, and USA Today, he's covered motorsports and the NHL as beats. He also once made a tail-hook landing on an aircraft carrier with Dale Earnhardt Jr. and rode to the top of Mt. Washington with Travis Pastrana. John Tortorella has yelled at him numerous times.

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