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North Carolina Committee Advances Sports Betting Bills with Higher Tax

North Carolina Committee Advances Sports Betting Bills with Higher Tax article feature image
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Photo by Bill McCay/Getty Images for Draft Kings

North Carolina is progressing towards online sports betting in the final days of its 2022 legislative session.

The House Judiciary 1 Committee approved two bills on Tuesday that would authorize up to 12 sports betting apps throughout North Carolina, where only in-person betting is currently allowed. Both passed 6-3 with one abstention.

It’ll need approval from the House Finance and Rules (set to meet tomorrow) committees before possible House passage. That must happen before June 30, or lawmakers will have to try again next year.

The first bill (SB 38) was recently introduced as a companion to the second bill (SB 688), which passed the Senate last year. It’s the product of a deal that ups the proposed tax rate from 8% to 14% and doubles license fees from $500,000 to $1 million.

“I think it’s really an irregular way to enact a really substantive policy in our state,” Rep. Pricey Harrison said. “To do it this way, I can’t vote for this bill, but I appreciate y’all amending it to make it slightly more palatable.

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Disappointment and Amendments

Harrison said she planned to introduce an amendment to prohibit the use of credit cards to pay for bets and ban betting on college sports, but “wasn’t allowed”.

The committee did unanimously approve a few amendments, including removing amateur sports from the definition of eligible events. It also included NASCAR in a list of beneficiaries from a fund used to attract major sporting events. Bill-sponsor Rep. Jim Perry said NASCAR was inadvertently left out of the original bill.

“I thought that when I included amateur it included college sports,” Harrison said. “I’d be much happier seeing this bill moved if I’d been allowed to run those two amendments.”

Rep. Abe Jones also voted against both bills, though he took different issue with them.

“Great we’ll be the 36th state, whoopty doo,” Jones said.”Do we need money this way? Taking advantage of addicts?”

Tax Structure in Question

Harrison also called out the tax structure, which lets operators deduct an unlimited amount of revenue tied to promotion bets from their taxable income. She cited states like Virginia that have seen a low revenue return despite a high betting volume.

“The house always wins,” Harrison said. “I cannot express how upset I am and what terrible policy.”

Harrison pointed out that North Carolina’s constitution prevents income taxes over 7%. She asked whether a court might take issue with the 14% tax on gross gaming revenue proposed under his bill.

Perry’s staff responded by saying it could run the risk of being deemed as an income tax, but instead of typical tax penalties, dodging the tax would only result in losing the ability to legally take bets.

“It feels like that’s clear delineation,” they said. “We made an honest effort to structure it in a way that if someone didn’t pay, they’d lose a license.”

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