Despite these booming numbers, North Carolina’s sports betting landscape has not been without controversy, particularly when it comes to the way winnings are taxed. Unlike federal law, which allows gamblers to deduct losses, North Carolina taxes all gambling winnings without accounting for net losses. This has sparked frustration among bettors, some of whom say they may leave the market if the tax structure remains unchanged.
Lawmakers Push for Tax Reform as Gamblers Feel the Squeeze
State Rep. Keith Kidwell, a Republican from Beaufort County with decades of experience in tax accounting, is among those advocating for a change to North Carolina’s tax policy on gambling. Kidwell and Rep. Erin Pare have introduced a bill that would allow gamblers to deduct their losses against their winnings when filing state taxes, mirroring federal rules.
“He wins about $300,000 every year,” Kidwell said of a client. “He also loses about $300,000 every year. … But at the end of the day, he paid over $20,000 in taxes to the state of North Carolina for money he literally did not have.”
If passed, the bill would allow gambling losses to be itemized as deductions. However, only those who itemize their taxes would benefit, excluding bettors who take the standard deduction. The proposed change has drawn both support and criticism. Proponents argue that it brings fairness to the system, aligning the taxation of gambling with other financial activities such as stock trading. Critics, however, see it as a subsidy for gambling that could cost the state upwards of $20 million in lost revenue.
Rev. Mark Creech, a vocal opponent of gambling expansion, warned about the broader social consequences:
“Gambling is not a victimless activity. It often leads to financial hardship, addiction, and a host of social problems that extend beyond the individual.”
The push for reform comes as North Carolina’s sports betting market continues to surge. The Super Bowl, one of the biggest betting events of the year, will further contribute to the state’s growing tax revenue, with February’s numbers yet to be released. However, unless legislative changes are made, some bettors fear they will continue to pay steep taxes on winnings that, in some cases, don’t reflect their overall financial reality.
As the debate unfolds, lawmakers will have to weigh the benefits of tax fairness against the potential financial impact on state coffers. For now, North Carolina remains one of the few states where bettors can win big but still lose at tax time.
