North Carolina Sports Bettors Will Soon Have to Pay Taxes on Losses

Submitted by C Costigan on

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C Costigan

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North Carolina Sports Bettors Will Soon Have to Pay Taxes on Losses
  • New North Carolina sports betting bill would tax winnings at 4.25% with no loss deductions

  • "With this precedent-setting provision, the Secretary of State can request win-loss reports from mobile operators & determine whether taxpayers are accurately reporting."

A provision in Senate Bill 595 requires sportsbooks to share records of anyone with $2,000 or more in gross winnings from a single app, applying retroactively to 2025 for tax verification. 

Unlike federal rules, the state taxes all winnings at 4.25% with no loss deductions, prompting backlash from bettors and analysts who warn it could push players to offshore or corner bookies. 

Senate leader Phil Berger now supports adding loss deductions, while a separate bill remains stalled, leaving bettors awaiting the governor's decision amid booming legal wagering.

Passage of the bill will almost certainly guarantee a large chunk of North Carolina sports bettors move to offshore sportsbooks and/or prediction markets.  Local bookmakers will also likely thrive. 

From FairPlayGov: 

"Insane. Last night, NC lawmakers passed a tax bill that further penalizes sports bettors who have gross winnings of $2k from any single mobile app. NC bettors are already not allowed to deduct losses at all from winnings on state tax return (!) & are already capped at deducting 90% of losses on the federal return.

"With this precedent-setting provision, the Secretary of State can request win-loss reports from mobile operators & determine whether taxpayers are accurately reporting.

"Most losing bettors don't bother reporting so people generally roll their eyes on these issues. But now NC DOR will know that you were supposed to report & even worse, it starts with last year."

 

 

Brett Chandler, a sports gambler, offered his ananlysis: 

"NC DOR has a sharing agreement with the IRS. They already get access to the W2-G and federal 1040. It is amazing to me how people can’t comprehend what this bill does. It gives your entire wagering history to the government once you win an aggregate amount of $2,000 (not just one wager and you ignore all losses) in the prior calendar year. You will pay income tax on every single winning wager without factoring losses. If they pass a state gambling loss deduction, you will still lose your federal standard deduction, AGI phaseouts impacting child tax credit et al, and be subject to the 90% limit from OBBBA. No other state to my knowledge has this reporting requirement. They also changed the bill from DOR “may” request to “shall.” This bill could have easily just required the operators to report actual profit/loss for the calendar year. It is designed to increase revenue without increase taxes on the operator."

And podcaster Captain Jack had this to say in regard to how the bill passage would impact all sports bettors, big and small: 

"TLDR: If you bet on sports in North Carolina, the state government wants 4% of your winning wagers with no deductibility of losing wagers.  The operators will be required to send them your betting records. A $50 bettor who makes 20 wagers a week will LOSE $2600 a year and STILL OWE $1040 in state taxes and about $100 in federal taxes. Never seen a bigger endorsement of Prediction Markets than this."

 

North Carolina is a state that sees a thriving sports betting market for local teams year round having just won the Stanley Cup with their Hurricanes.  The state has a robust college basketball market.  And even in baseball, the Tar Heels were just defeated by Oklahoma in the Men's College World Series championship game. 


  • Chris Costigan, Gambling911.com Publisher 
     

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