North Carolina puts the onus on the betting sites to catch tax cheats
One of the unique changes in
SB 595
is that the state is placing the responsibility for assuring that winning sports bettors are paying taxes in the hands of the state's sports betting site operators.
It's rare for betting sites to issue W-2G tax forms. That generally leaves it up to the individual bettor to be honest about how well they do with their wagering.
This will all change if SB 595 becomes law. The bill calls for the
North Carolina Secretary of Revenue
to directly access on-demand detailed sports betting information from all of the state's betting platforms. Data that must be supplied includes the identity, Social Security number or tax ID, address, and wagering history of every account holder on each betting site.
It's anticipated that this unique access to player wagering information is going to significantly boost tax compliance within the state. This change could also prove to be a precedent-setting move. Other state legislatures may look upon this plan as a method for increasing accountability within the sports betting industry. It's also a logical step to modernize the entire tax reporting process.
North Carolina's tax collection program for sports betting would be unique
Other states have implemented similar systems for keeping tabs on sports bettors and their wagering.
In New Jersey, betting platforms must maintain full wager-level logs on each player that are available for inspection. Both Pennsylvania and Michigan have laws allowing the Gaming Control Board to access records, including sports betting wagers.
The difference between these programs and the North Carolina proposal is that the state gaming authorities are operating those systems. North Carolina's plan puts the Secretary of Revenue in charge of monitoring all betting tax data.
State lawmakers aren't getting the rate of tax increase they were originally seeking
At the outset, SB 595, a Republican-sponsored bill, sought to see the sports betting tax rate hiked to 50%. Increasing the tax rate is helping fund an aggressive $68 billion spending proposal in the state's upcoming budget.
Even at its final level of 23%, a 5% increase over the current rate, the decision has its critics. The Sports Betting Alliance (SBA) is complaining loudly about the tax hike. It is a lobby group representing sportsbooks FanDuel, DraftKings, BetMGM, bet365, and Fanatics. They are expressing concern about the impact it will have on sports betting in the state.
"When states raise taxes, the costs get passed down to customers — directly hitting your wallet," the SBA said in a statement. "It punishes NC sports fans who play by the rules and pushes more people toward illegal offshore sites with no consumer protections.”
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