Key Takeaways
- Senate Bill 595 in North Carolina mandates sportsbooks report any bettor earning $2,000 or more annually to state authorities
- State tax regulations currently prohibit bettors from offsetting winnings with losses on their returns
- A companion measure seeks to increase the tax rate on sportsbooks from 18% to 23%
- Critics claim certain sections were inserted into the legislation without adequate scrutiny
- Governor Josh Stein must sign the measure before it takes effect
North Carolina legislators have approved new tax legislation that intensifies scrutiny of sports wagering participants. The measure, identified as Senate Bill 595, establishes a reporting mandate requiring sportsbooks to share information about any player whose annual winnings reach or exceed $2,000.
This reporting framework would provide the state’s Department of Revenue with comprehensive bettor data including full names, residential addresses, taxpayer identification numbers, betting activity, results, and aggregate winnings. Legislative supporters characterize the initiative as aligning state practices with existing federal reporting protocols.
Why This Has Sparked Controversy
Pushback against the measure has been immediate and vocal. The primary grievance centers on North Carolina’s refusal to permit loss deductions on state income tax filings. Under this structure, a gambler who earns $2,000 but simultaneously loses $2,000 would still face state taxation on the entire $2,000 in earnings.
Complications intensified following a recent federal policy modification. Federal gambling loss deductions now face a 90% ceiling, creating a dual squeeze on bettors at both governmental levels.
Opponents note that North Carolina already exchanges information with federal tax authorities. State officials currently have access to W-2G documentation and federal tax submissions. The new regulation would simply provide state agencies with enhanced granularity once a player surpasses the $2,000 threshold.
[[EMBED_0]]Several observers have raised alarms about potential retroactive enforcement, with concerns the requirement “starts with last year.”
Senate leader Phil Berger has expressed support for permitting loss deductions and indicated his understanding that such language was incorporated in the current legislation. However, this aspect remains unresolved.
Last-Minute Amendments Under Fire
The legislation advanced this week as a conference committee report. Detractors argue that certain components were introduced hastily without thorough legislative examination.
Senator Tom McInnis, among the bill’s primary architects, acknowledged the final draft contained “a couple of late provisions that some of you didn’t see.” Despite this admission, he maintained his support for the comprehensive legislation.
Governor Josh Stein now holds the authority to approve or reject the measure before it can be enacted into law.
Additional Tax Rate Increase Under Consideration
Operating in parallel with SB 595 is another legislative effort. This companion measure seeks to elevate the tax burden on sportsbooks from 18% to 23% of gross wagering revenue.
This rate adjustment would be incorporated into North Carolina’s 2026 fiscal budget, which legislators must finalize by the June 30 deadline. A House budget committee member confirmed chamber agreement on the increase, though no formal enactment has occurred.
During the previous year, Senate members advocated for doubling the rate to 36%. That initiative collapsed when the House and Senate reached an impasse before the legislative session concluded.
Should this measure succeed, North Carolina would follow Illinois, Ohio, Maryland, Louisiana, and New Jersey in implementing sportsbook tax increases in recent legislative cycles.
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