North Carolina Hikes Sports Betting Tax to 23% as Part of New State Budget

North Carolina Gov. Josh Stein signed a $34 billion fiscal year 2026 budget bill on Tuesday that raises the state’s sports betting tax rate from 18% to 23%, along with granting state revenue officials expanded authority to audit individual bettors’ wagering records. The tax hike was part of SB 257, a budget bill that took more than a year to negotiate before Republican legislative leaders reached a deal last week.

North Carolina legalized online sports betting in March 2024, and the market has grown steadily since launch, with major national operators including DraftKings, FanDuel, BetMGM and Caesars all live in the state. The five-percentage-point tax increase puts North Carolina among a growing list of states revisiting their original tax rates upward once mobile wagering proved its earning potential.

A Familiar Pattern Across States

North Carolina’s move follows similar tax increases in states like Illinois and New York, where lawmakers determined that initial sports betting tax rates set during the legalization push were too conservative given the actual scale of operator revenue. Higher tax rates squeeze sportsbook margins directly, and operators in states that have raised rates have sometimes responded by trimming promotional offers or adjusting odds pricing to offset the added cost.

For North Carolina bettors, the practical impact may show up gradually rather than immediately — sportsbooks tend to absorb near-term tax changes before making visible adjustments to bonus structures or line pricing. But the added audit authority granted to state revenue officials represents a more immediate shift, giving regulators a new tool to examine individual betting activity that wasn’t previously part of the state’s oversight framework.

Part of a Broader Budget Compromise

The sports betting tax increase was bundled into a much larger fiscal package that took over a year of debate to finalize. Lawmakers on both sides of the aisle had been at odds over how to balance the state’s finances, with the sports betting and gambling tax provisions ultimately becoming part of the compromise that ended the legislative stalemate.

The budget bill also included a separate provision taxing prediction market platforms’ trading fee revenue at 6%, making North Carolina one of a handful of states now extracting tax revenue from the fast-growing sector of sports-related event contracts, alongside traditional North Carolina sports betting operators.

What Bettors Should Watch

With the new tax rate now signed into law, North Carolina bettors should keep an eye on any adjustments to promotional offers or odds from major operators in the state over the coming months. States that have implemented similar tax hikes have generally seen operators respond within one to two fiscal quarters, making late 2026 a reasonable window to watch for any visible changes in the North Carolina market.