In this column, published in the Triangle Business Journal, Assistant Bill Squadron writes about the economic potential of sports betting in North Carolina.
By Bill Squadron, Assistant Professor of Sports Management
North Carolina has so far approved sports betting in only two Indian locations near the Tennessee border. But the legislature is considering a bill that would allow online and mobile betting on sporting events across North Carolina.
When mobile betting is legal, the public response shows its interest and approval. When New York expanded its license from retail to online / mobile, the stake jumped from $ 21 million to $ 1.7 billion in one month.
The sports betting industry is here to stay and is a powerful financial engine. It creates jobs, generates advertising and marketing, raises media ratings and provides significant, additional tax revenues to support the needs of the state.
For business reasons, the state should not lag behind in this new part of the sports industry. States like North Carolina see monthly sports betting approaching $ 1 billion, generating approximately $ 750 million in annual taxable income. And this is only in the first year of legalization – the number will certainly grow.
The North Carolina State Senate passed legislation last year, SB 688, to legalize online and mobile sports betting, which will be provided by up to 12 licensed bookmakers selected by the North Carolina Lottery Commission. A committee of the House of Representatives passed the bill in the autumn, and additional committees of the House will consider it at the upcoming session.
The chamber must make changes to the bill before it is passed. Most importantly, the current 8 percent tax rate on bookmakers’ revenues should be doubled from that figure, which would make it more in line with most states. Virginia’s tax rate is 15 percent; Tennessee is 20 percent.
It should be noted that New York has imposed a tax rate of 51 percent, which will make it virtually impossible for bettors to run a successful business in this state. Over time, this number should decrease. But even with such an unjustifiably high number, this does not discourage bookmakers from starting work there – proof of the long-term potential of the sports betting market.
The legislature should change the pending North Carolina bill to 15 percent, and it should be imposed on gross revenue instead of allowing the bookmaker to deduct its marketing costs, as the current bill does. At 15 percent, with a likely $ 10 billion in bets made annually, tax revenue will exceed $ 100 million a year.
As stated in SB 688, some of this money must be spent on tackling gambling addiction. The Chamber needs to increase the part dedicated to tackling this problem.
Like any industry, sound policy and regulation are needed to properly manage the problems of any industry. Gambling addiction already exists today in North Carolina. It will be much better to bring him to light and help treat him.
The ban on sports betting will not stop him. The NCAA semifinals between UNC and Duke have raised millions of dollars in bets from North Carolina residents – either with friends, with illegal offshore bookmakers who do not pay taxes, or across the border in Tennessee or Virginia, where those states have benefited from tax revenue.
The Senate bill, which is before the House of Representatives, needs to be amended, passed and signed so that North Carolina’s economy can include this growing industry – so state fans can start gambling openly and legally.
The views expressed in this column are those of the authors and not necessarily those of Elon University.