The North Carolina General Assembly passed a sports betting bill, House Bill 347, on Wednesday, June 8, 2023. The legislation now proceeds to the desk of Governor Roy Cooper (D) who has indicated that he will sign it into law. Although sports betting was already legal at the state's two tribal casinos, the new bill will expand it to retail locations at sports venues and online.

About the New Law

Under the terms of HB347, the North Carolina Education Lottery Commission will be charged with regulatory oversight of the sports betting industry. It will be empowered to license operators and establish rules for the industry.

There are three types of licenses available. Interactive sports wagering operator licenses are capped at 12 total. These are the main licenses that will allow companies to provide online sports betting services within the state of North Carolina.

Service provider licenses are required by those entities that establish betting markets, grade results, and manage wagers on behalf of an interactive sports wagering operator. Sports wagering supplier licenses will be needed by those who supply software, services, and other goods to interactive sports wagering operators.

Indian tribes, which are already permitted to accept sports wagers on tribal lands, can apply for interactive sports wagering operator licenses so as to be able to accept bets from patrons located outside tribal lands.

Eight sports facilities will be allowed to partner with interactive sports wagering operators to accept sports bets at what are known as “places of public accommodation.” They are allowed to host such places of public accommodation on the property of the sports facility and are further permitted to have one such place within a half-mile radius of the sports facility and another one within a one-and-a-half-mile radius of the sports facility.

The eight sports facilities that will be permitted to offer retail sports betting are:

• Bank of America Stadium in Charlotte (home of NFL's Carolina Panthers and MLS' Charlotte FC)
• Charlotte Motor Speedway (home of NASCAR racing)
• North Wilkesboro Speedway (home of NASCAR racing)
• PNC Arena in Raleigh (home of NHL's Carolina Hurricaines)
• Quail Hollow Country Club in Charlotte (home of PGA Tour events)
• Sedgefield Country Club in Greensboro (home of PGA Tour events)
• Spectrum Center in Charlotte (home of NBA's Charlotte Hornets)
• WakeMed Soccer Park in Cary (home of NWSL's North Carolina Courage)

Revenues and Fund Allocation

The cost of applying for an interactive sports wagering operator license is set at $1,000,000. A service provider license costs $50,000 while a sports wagering supplier license has a fee of $30,000. If any application is denied, the applicant will get back 95% of the fee. Licenses are valid for five years, but they can be renewed for an additional five years at the same price as they originally cost.

These license fees may be used by the Commission to offset the expenses of administering the regulated sports betting framework established by the law. Any extra funds will be placed in the state's General Fund at the end of each fiscal year.

In addition to license fees, interactive sports wagering operators will be subject to an 18% tax on gross wagering revenue paid monthly. The monies collected from this tax will be distributed as follows:

• The Lottery Commission may retain up to $500,000 per year for administrative expenses related to sports betting
• $2,000,000 annually toward problem gambling education and treatment
• $1,000,000 per year for youth sports grants
• $300,000 yearly to support college athletic programs
• $1,000,000 each year for grants to enable sporting teams to travel to events and to attract sports events to the state
• Of the remaining funds:
  • 20% toward college athletics
  • 30% toward the North Carolina Major Events, Games, and Attractions Fund, which will attempt to stimulate economic activity within the state by attracting major events with a view toward boosting the travel and tourism sectors
  • 50% to the General Fund

Rules and Restrictions

Sports betting will only be available to those aged 21 or older located within the borders of North Carolina. Members of the Lottery Commission will not be allowed to place bets, and employees of a license holder cannot wager on their own betting platform. Participants in sporting events, including coaches and employees, are prohibited from betting on events in which their organization is participating.

Aside from these restrictions, the menu of options available for North Carolina sports betting will be extensive. Wagers on college sports are allowed, including those on N.C. teams. Betting on eSports and amateur sports is permitted too. The only types of bets explicitly disallowed by the bill are:

• Youth sports
• Bets on injuries, penalties, disciplinary proceedings against an athlete, or the outcomes of replay reviews

The Lottery Commission is authorized to punish infractions of the rules with licenses suspension, license revocation, or a penalty of up to $10,000 for each violation.

Official League Data

North Carolina is one of only a few states to subscribe to the notion of official league data. This is a provision that athletic governing bodies have attempted to inject into sports betting legislation across the country. It forces sportsbooks to use data officially supplied, either by a league or its authorized entity, when grading wagers on that sport.

In North Carolina, bets that depend only on the final score or outcome of a match and are placed before the contest begins do not require official league data. Neither do wagers on events taking place outside the United States. All other wagers are subject to the use of official league data although the sports governing bodies have to formally request and receive approval from the Lottery Commission before the sportsbooks are obligated to comply.

There are certain cases in which sportsbooks will be able to avoid using official league data, like when such data is not provided by the league or if it's not available “on commercially reasonable terms and conditions.” This language about commercially reasonable terms echoes that of the Tennessee legislation from 2019 that legalized sports betting in that state.

Other Wagering Pastimes

HB347 deals mostly with sports betting and does not really expand many other types of gaming. Thus, online casinos are not envisioned within its ambit, and neither are online poker sites going to be licensed under the provisions of this bill either.

However, parimutuel advance deposit account wagering is also legalized by the bill. Licensees will have to pay $1,000,000 for a five-year license and will also need to hand over 1% of handle annually. This money will be used to offset the expenses of the Lottery Commission with the remainder placed in the General Fund. Only those above the age of 21 who are residents of North Carolina will be able to participate in ADW activities.

Road to Legalization

While certain other jurisdictions, like West Virginia and New Jersey, were pretty much ready for sports betting immediately after the landmark Murphy v. NCAA Supreme Court decision was rendered in May 2018, things did not proceed as quickly in the Tarheel State.

Previous Attempts

It took more than a year for even limited North Carolina sports betting to be legalized with SB154 in July 2019. This set up retail-only sports betting at only a few tribal locations within the state. Almost immediately, there were calls to expand the industry.

This is what State Representative Jason Saine (R) tried to do in 2021, in conjunction with his college State Senator Jim Perry (R). Their bill passed in the Senate, but the House took no action. The following year, the bill failed to pass in the House by a one solitary vote.

HB347 Works Its Way Through the Legislature

In 2023, Saine tried again, filing his bill on March 13. It went through three readings in the house, passing the third on March 29 by 64 – 45. There it proceeded through the Senate, seeing a vote of 37 – 11 on the third reading on June 1.

The Senate made a few changes to the House version of the bill, most notably raising the tax rate from 14% of gross wagering revenue to 18%. The bill therefore had to go to the House for concurrence, which it achieved on June 7 with a vote of 69 – 44.

HB347 then was presented to the governor on June 9. The governor has 10 days to act either by signing it into law, vetoing it, or allowing it to become law without his signature. In case Governor Cooper vetoes the bill, his decision can be overridden by a three-fifths vote in each chamber.

However, it's unlikely that there will be a veto. The governor has already indicated that he supports sports betting and intends to sign the bill.

Moving Forward

According to the legislation that has just passed, the earliest date that any sports betting license can become valid is Jan. 8, 2024. However, the final determination of launch date is left to the discretion of the Lottery Commission as long as it's no later than 12 months after HB347 becomes law. Both of these stipulations in conjunction mean that we're looking at a timeframe of between Jan. 8 and mid-June next year for the launch of non-tribal sports betting in North Carolina.

According to a Fiscal Note by the North Carolina General Assembly, state revenues from sports betting are expected to approach $100 million annually after five years.

It may perhaps be useful to look at the sports betting market in neighboring Virginia, which launched in January 2021. For the calendar year 2022, Virginia saw $4.9 billion in sports betting handle, which generated $481 million in revenue. Had this revenue been subjected to North Carolina's 18% tax, it would have led to $87 million in taxes.

North Carolina's population is around 10.7 million, comparable to but greater than Virginia's 8.7 million. Thus, forecasts of an eventual $100 million in annual taxes from sports betting appear quite reasonable and perhaps even a bit pessimistic.

N.C. Sports Betting Possible Today

We will likely have to wait for the better part of a year before the first regulated online sportsbooks appear in North Carolina. However, there are several offshore bookmakers that do business in the state, and you can sign up for one of them today and begin betting. There are no laws against betting with these sites – at least, no laws that are enforced against ordinary bettors.

To learn more about your options in this regard, check out this page on USA online sportsbetting. Or if poker is more your game, read this guide to online poker for American players. Casino gaming enthusiasts may prefer to learn about the top US-friendly internet casinos.