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Online sports betting legislation in North Carolina cleared a key hurdle on Tuesday (March 28), earning a favorable vote in the state's House of Representatives where it failed to receive one last year.
The North Carolina House voted 66-45 to pass House Bill 347, a bill that would legalize mobile sports wagering in the state, on second reading.
The bill will require another favorable vote from the full House in order to fully clear the chamber and advance to the Senate, but that vote is expected to come as early as today.
In 2022, the first full vote on the second reading in the House was where the state’s efforts to authorize mobile sports betting began to unravel, with an amendment being passed to prohibit all betting on collegiate events in the college sports-mad Southern state being the first domino to fall.
Ultimately, the modified bill failed to pass by one vote.
This year, however, supporters had their effort lined up properly, with more than two-thirds of the chamber voting to support the bill and kill any amendment that threatened it, including a similar proposed collegiate wagering ban.
Under the legislation, the North Carolina State Lottery Commission would issue between ten and 12 mobile sports-betting licenses that would be untethered to any physical location or stakeholder.
Professional sports facilities in the state would also be able to operate “places of public accommodation” where players must still use an interactive wagering account but could place wagers using cash.
Licensed operators would pay a $1m license fee and a 14 percent tax rate on sports wagering revenues.
The bill proposes full promotional play tax deductions through January 2025, limited deductions in 2025 and 2026, and no deductions for promotional play beginning in 2027.
The bill did receive some tweaks in a committee amendment earlier in the day that included the removal of pari-mutuel wagering on horse or dog racing.
Critics also referenced some of the issues that have been a debate in sports wagering nationwide, including partnerships struck between operators and colleges that have proven to be very controversial among legislators and regulators, to the point that the American Gaming Association (AGA) prohibited them in an update to its self-regulatory Responsible Marketing Code published on Tuesday.
“We’re turning a sport into gambling; the performance of the athletes, the performance of the teams is becoming an event for gamblers,” said Representative Marcia Morey, a Democrat. “And it’s going to be in the view of the kids, sports is going to become, how do I learn to gamble, how can I make fast money?”
The critics also referenced the flood of gambling advertising that has accompanied many of the launches of legal sports betting in other states, as well as some of the regulatory violations that companies have committed during those advertising blitzes.
Democratic Representative Julie von Haefen said she was visiting family and friends in Ohio during the state’s sports-betting launch on January 1 and found the advertising “incessant,” with reports from those family and friends suggesting that the barrage has not slowed in the months since.
Von Haefen pitched an amendment that would raise the maximum fine for a regulatory violation from $10,000 to $1m, but the amendment was convincingly defeated, as were amendments from other representatives that would have significantly increased the license fee and tax rate.
Another amendment from Morey that would have prohibited operators from offering promotional credits also was voted down.
“These big gambling corporations figure that even the cost of millions of dollars and penalties is worthwhile for the chance to gain a foothold in our state, and states like Ohio,” von Haefen said. “Fines need to be high enough to prevent these multi-billion dollar companies from just factoring in a small $10,000 fine into their business model.”
Governor's Budget Backs Expanded Gambling
If the bill clears its third and final reading in the House, it will advance to the Senate, which passed similar legislation in 2021.
If passed by the legislature, Democratic Governor Roy Cooper is very much expected to sign the bill into law as he has supported sports-betting legislation and even included revenue from mobile sports wagering in his proposed budget released earlier this month.
The governor's budget recommendation includes $85m in anticipated revenue from mobile sports wagering during the 2023-25 biennium, with sports betting as one of three expanded gambling initiatives being supported by Cooper.
The governor's budget proposal also calls for $184m in revenue to be generated by an expansion of the North Carolina Education Lottery's iLottery program to include e-instant games in addition to the current offering of tickets to draw games such as Powerball.
A further $243m would be generated through the legalization of video lottery terminals (VLTs) to be managed by licensed operators overseen by the North Carolina State Lottery Commission.
A maximum of ten VLTs would be allowed at bars and other establishments licensed to serve liquor, with the same number permitted at qualified truck-stop locations, according to Cooper's proposed budget bill.
The governor's office has not responded to a request by VIXIO GamblingCompliance to comment on his budget proposal, while a spokesperson for the North Carolina Education Lottery told VIXIO earlier this week that “any decision on VLTs in North Carolina would be a decision made by the North Carolina General Assembly”, rather than by the lottery itself.
Although Governor Cooper is a Democrat, the state House and Senate are both controlled by the Republican Party.
Additional reporting by Chris Sieroty and James Kilsby.
