Here’s one place North Carolina should tax like New York | Opinion
North Carolina should not generally take tax advice from New York. As a rule, that has served us pretty well.
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But every rule has an exception, and mine is sports gambling.
Right now, lawmakers are debating whether to raise the state’s tax on sports betting operators. North Carolina launched legal online sports betting in 2024 with an 18% tax rate. Recent budget talks have focused on moving that number a decent bit higher — perhaps even doubling it, as an early Senate proposal would do.
That would be an improvement. But why stop there?
I would repeal legal sports betting if I could. Turning every phone into a pocket casino isn’t particularly good for North Carolina. But since that debate appears to be settled for now, let’s double down on the taxes.
That may sound like an odd argument from someone who generally wants taxes to be lower. But low-tax conservatism has never meant treating every activity the same.
There is a difference between taxing a paycheck and taxing a parlay.
North Carolina’s move toward a lower-tax, pro-growth model has been one of the great policy successes of the past decade. By cutting taxes on income, investment and business activity, the state has made itself a magnet for newcomers and new companies. Lawmakers should keep going.
But a low-tax philosophy does not require pretending every activity is equally worth encouraging.
There is an old economic truism, popularized by Alan Greenspan, that “whatever you tax, you get less of.” Usually, conservatives use that as a warning. Tax work too much, and you discourage work. Tax investment too much, and you discourage investment.
But sometimes “less of” is the point.
A higher sports betting tax will not fix everything that comes with gambling. But it would recognize that sports betting is different from the kinds of activity North Carolina has spent the past decade trying to encourage.
The state can keep taxes low on work and investment without giving gambling operators the same treatment.
The sports betting industry, unsurprisingly, would prefer that lawmakers leave the tax rate alone.
The Sports Betting Alliance has spent more than $156,000 on Facebook advertising in North Carolina over the past 30 days, more than any other advertiser in the state by far. The ads urge people to call lawmakers and oppose a higher tax on online sports betting.
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“North Carolina already has a fair tax rate on online sports betting,” the ads say. “Don’t let a massive tax hike push players back to the illegal market.”
It is a smart message, but other states make the industry’s warning hard to swallow. High tax rates have not made sports betting disappear. New York taxes sports betting at 51%. So do Rhode Island, New Hampshire and Oregon. Illinois moved from a 15% rate to a 40% rate and still brought in enormous revenue.
These companies know how to operate in high-tax states. They just prefer not to.
A higher tax rate is only defensible if North Carolina avoids the obvious trap: becoming dependent on gambling revenue.
When budget writers begin to count on it, the state pretty quickly has its own interest in keeping the bets coming. North Carolina should avoid that from the beginning.
Any additional sports betting revenue should be kept out of the recurring budget and used for one-time needs, like capital projects, debt reduction, or other investments that do not require another year of gambling losses to sustain them.
The industry is asking lawmakers to protect North Carolina sports fans by keeping taxes low. Lawmakers should see it differently.
Keep taxes low on the things North Carolina actually wants more of, like work and investment. On sports betting? Tax it like New York. Actually, tax it just a little bit more.
Make it 52%.
Not because Raleigh should imitate Albany very often, but because even New York can be right once in a while.
Contributing columnist Andrew Dunn is the publisher of the Longleaf Politics newsletter, which offers thoughtful analysis of North Carolina politics and policy from a conservative perspective. He can be reached at [email protected].
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