Key Takeaways
- State legislators increased the sports betting tax from 18% to 23%, effective in 2026
- May 2026 saw more than $561 million in total wagers — marking the ninth consecutive month surpassing $500 million
- Tax collections have exceeded $299 million since the market opened in March 2024
- Industry representatives criticized the increase, arguing it penalizes compliant operators contributing substantial tax payments
- The new rate positions North Carolina above states like New Jersey, Massachusetts, and Ohio, though significantly below New York’s 51% levy
North Carolina’s legislature has approved an increase to the state’s online sports betting tax rate, bumping it from 18% to 23%. This marks the first adjustment since the market’s debut in March 2024.
The 5-percentage-point increase comes amid sustained growth in wagering activity throughout the state. May 2026 alone recorded more than $561 million in total handle. This milestone represents the ninth consecutive month where betting volume has surpassed the half-billion-dollar threshold.
From the market’s inception, residents have wagered upward of $15 billion through legal channels. Operators have generated $1.6 billion in gross gaming revenue, translating to more than $299 million in state tax collections.
While some legislators proposed a more dramatic increase to 50%, the final agreement settled at 23%.
Revenue Allocation
Proceeds from the sports betting tax support multiple initiatives across the state. Designated beneficiaries include programs addressing problem gambling, youth athletics initiatives, the Major Events, Games and Attractions Fund, and athletic programs at 13 institutions within the University of North Carolina System.
Additional funds are allocated to the state’s general fund, which finances education, law enforcement, infrastructure projects, and healthcare services.
House Speaker Destin Hall praised the initiative’s performance. “It’s been a tremendously successful policy in this state,” he said. “A lot of people apparently like to do that sort of thing for one reason or another.”
According to WRAL journalist Brian Murphy, applying the 23% rate retroactively would have generated an extra $83 million for state coffers.
Wagering trends show continued expansion. Between January and May 2025, total handle reached $3.0 billion. During the corresponding period in 2026, that figure climbed to $3.2 billion.
Industry Opposition
The tax adjustment has drawn criticism from licensed operators. The Sports Betting Alliance, representing legal sportsbook companies, characterized the increase as a penalty against businesses that have already delivered significant tax contributions.
“This tax hike will only penalize licensed, regulated companies who have delivered hundreds of millions in tax revenue to the state and the UNC System athletic departments,” the organization stated.
FanDuel specifically highlighted potential impacts on college athletics funding. In communications to its customer base, the operator emphasized that legal sports wagering generates meaningful revenue streams for university athletic programs, and suggested the tax increase could jeopardize those contributions.
The updated rate places North Carolina above several comparable markets. New Jersey levies 19.75%, while both Massachusetts and Ohio charge 20%.
Yet North Carolina remains far below the highest-taxing states. New York, New Hampshire, and Rhode Island each impose a 51% tax on operator revenue. Delaware charges 50%, Pennsylvania takes 36%, and Illinois employs a graduated structure spanning 20% to 40%.
At 23%, North Carolina now occupies the upper-middle tier among state sports betting tax frameworks nationwide.
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