The forthcoming launch of online NC sports betting could produce $7 billion in handle in the market’s first 12 months, according to LSR projections.
Regulated online North Carolina sports betting would generate at least $600 million of gross revenue in its first full year of operation at that rate, with some additional room to grow that over time. Legislative researchers anticipate around $65 million in first-year tax revenue from North Carolina sports betting, a number that registers as conservative against LSR’s expectations.
Numbers in that ballpark would put the Tar Heel State in immediate contention for a top-five spot in the country.
NC sports betting numbers in context
The forecasted range would put North Carolina comfortably inside the national top 10, possibly even competing with the likes of Florida, Pennsylvania, and Ohio for a spot in the top five. Its closest comparison for volume could wind up being Nevada, the nation’s oldest regulated gambling market and current number four on the sports betting revenue leaderboard.
The state of North Carolina will tax gross sports betting revenue at 18%, with no allowance for promotional deductions, a middle-of-the-road rate that reflects a measured approach. Such deductions allow operators in some US markets to substantially reduce their tax payments to the state.
North Carolina stands to collect more than $10 million in upfront license fees from operators, at $1 million apiece for the first five years.
Online NC sports betting at a glance
Expanded sports betting in North Carolina leverages the state’s existing sports and tribal gambling infrastructures, allocating 11 licenses for local sports organizations plus one apiece for the two tribes via updated compacts.
Most of the market-access partnerships are already in place:
- Charlotte Hornets – bet365
- Charlotte Motor Speedway – BetMGM
- Eastern Band of Cherokee Indians – Caesars
- NASCAR – DraftKings
- Quail Hollow – ESPN Bet
- Carolina Hurricanes – Fanatics
- PGA Tour – FanDuel
- Sedgefield Country Club – Underdog
- Carolina Panthers – TBD
- Catawba Nation – TBD
- Charlotte FC – TBD
- NC Courage – TBD
- North Wilkesboro Speedway – TBD
Not unique to Carolina though
This licensing framework is perhaps the most notable aspect of the new law in North Carolina, albeit not entirely unique. Arizona, Illinois, Maryland, Ohio, and the District of Columbia also allow their professional sports teams/leagues/venues to hold betting licenses.
With two PGA Tour courses and two NASCAR tracks in North Carolina, however, golf and racing will enjoy an outsized role in the local sports betting landscape. Those two sports fill six of the 11 commercial license slots.
Policy points of note in North Carolina
Policymakers in North Carolina avoided any major outliers as they ultimately coalesced around a competitive, permissive framework.
The competitive element is especially critical for the long-term financial outlook to the extent that it allows the best brands to offer their best-in-class products to local customers. The largest national operators will have a digital footprint in North Carolina, along with at least one newcomer that has eyes on challenging the status quo.
College sports betting also survived the long legislative process, including the 18 NCAA Division I teams that call the state home. The Duke Blue Devils and the North Carolina Tar Heels will drive a significant share of the local betting interest, with basketball perhaps generating outsized action across all levels and formats.
Bettors in North Carolina can also legally wager on Olympic events and esports, neither of which are universally available nationwide.
There goes the neighborhood?
Expanded betting in North Carolina will create some inevitable interplay with its neighboring states.
There is notably no legal sports betting beyond the southern border with South Carolina and Georgia, giving operators a chance to create some new customers from those two markets. South Carolina, in particular, has enough activity near the state line to make crossing over around Charlotte or Wilmington a temptation for bettors as far south as Columbia and Myrtle Beach.
Other active states in the region may conversely see a small negative impact from bettors who no longer need to leave North Carolina for the express purpose of betting. Virginia currently benefits from visitors coming in from the Triangle and Triad regions, while Tennessee draws from a smaller population in the Blue Ridge Mountains.
What else to watch in North Carolina
LSR’s overall outlook reflects a per-capita performance on pace with some of the strongest US markets. If North Carolina instead performs among the bottom half of states, then the floor of our forecast could be more like the long-term ceiling.
Brand-level thought experiments are interesting too. FanDuel and DraftKings generate upwards of 75% of all sports betting volume nationwide, and there is no obvious reason to expect anything different in North Carolina.
What about Caesars, though? It could, in theory, have an incumbent advantage by virtue of its brick-and-mortar operation at Harrah’s Cherokee dating back to 2021. Will that materialize into an increased market share? Could ESPN Bet and Fanatics make better inroads with on-time launches? What does Underdog’s unfinished sportsbook product look like?
These questions will not remain unanswered much longer. Online sportsbooks go live in North Carolina on March 11, just in time for the start of March Madness betting.
