NC Senate passes sports wagering bill; House must agree to changes

North Carolina moved a big step closer to legalizing online sports gambling on professional, college, horse racing and other sports and permitting in-person sports betting at certain venues across the state Wednesday.

The state Senate passed House Bill 347 38-11 on its second reading. The Senate must vote again on the measure Thursday, a formality that is unlikely to lead to any changed votes. It is a bill that drew rare support and opposition from both Republicans and Democrats in the legislature.

The legislation will have to return to the House, where lawmakers must agree to the Senate's many changes, and be signed by Gov. Roy Cooper before becoming law. House and Senate sponsors said they have worked together on the changes. Cooper has been supportive of the effort to legalize sports wagering.

But House Speaker Tim Moore, R-Cleveland, said Wednesday that he does not favor concurrence with the Senate bill and instead would prefer that sports gambling be combined with other gaming expansion including casinos and video lottery terminals into a single bill.

"Right now the plan is probably that we don't concur, but we're going to talk through it," said Moore, who recently ended his own prohibition about speaking on gambling-related bills.

Senate leader Phil Berger, R-Rockingham, voted in favor of the sports gambling bill. Berger has said several times that lawmakers are having conversations about additional gaming in North Carolina, particularly with the opening of several Virginia casinos along the border.

"Let's go ahead and get this one," he said. "If there are other gaming issues, let's deal with them separately."

The primary sponsor of the sports gambling bill in the House said he was not aware of any effort to combine the bill with other gaming priorities.

"The supposed 'proposal' has not been run by me or the other bill sponsors," said Rep. Jason Saine, R-Lincolnton. "I don't deal that way, and our plan is to concur with sports betting only. I support the other efforts but they will need another vehicle."

The bill's effective date is Jan. 8, but it states that "sports wagering shall not be authorized in the State until a date identified by the [Lottery] Commission, which shall occur as soon as practicable and may be no later than twelve months after the date this act becomes law."

What the bill does

The Lottery Commission can award up to 12 licenses for operators to take online sports bets for any adult located in North Carolina. The bets are typically made through apps on phones or other electronic devices.

In addition, eight facilities across the state could operate a sports book under the bill: PNC Arena in Raleigh, WakeMed Soccer Park in Cary, Bank of America Stadium and Spectrum Center in Charlotte, Charlotte Motor Speedway, North Wilkesboro Speedway, Sedgefield Country Club and Quail Hollow Country Club. Each venue would be allowed to partner with one mobile operator, which could leave at least four licenses for operators without in-state partners.

Professional sports teams and facilities in the state asked for similar changes before the legislative session began, arguing they should see the most benefit form legalization not out-of-state operators.

Operators would be charged an 18% tax on gross gaming revenue and does not allow those companies to deduct the cost of promotions or credits often used to get customers to sign up. Projections indicate North Carolina could receive $100 million in tax revenue by the 2027-28 fiscal year, according to the state's fiscal research division. More than $6.6 billion would be bet in North Carolina by the third year of legalization, according to projections.

The state's budget is roughly $30 billion.

The leaders of conservative organizations such as the North Carolina Family Policy Council and The Christian Action League spoke against the measure as it made its way through a series of committees on the House and Senate side. Liberal and conservative lawmakers voted against the bill. Both groups arguing that the societal costs of expanding state-sanctioned gambling, including an increase in gambling addiction, would be devastating to North Carolinians.

"Gambling is a sure way of getting nothing for something," said Rep. Jim Burgin, R-Harnett, who also quoted the Bible in his floor speech. "I'll make a prediction today: We'll look back at this vote and each one of us will have an incidence or something will happen, and we will say was that the direct effect of what we voted on today."

Lawmakers likened gambling addiction to drug addiction. Rep. Julie Mayfield, D-Buncombe, said the state would never consider legalizing drugs like heroin, cocaine or even recreational marijuana. She said if lawmakers could go back and place stronger controls on opioids or tobacco use, they would.

"I'm afraid in a decade we will regret removing the guardrails that we are proposing to do," she said.

Berger couched the vote in terms of personal freedom, saying the legitimate concerns raised by opponents should be balanced against other interests.

"We also have the whole question of whether or not we have a free society where people can make their own minds up as to what they want to do," Berger said. "I think what you saw today is that more people fell on that side of the equation then on the side that government needs to micromanage people's lives."

A 2018 U.S. Supreme Court decision allowed for states to legalize sports gambling, which had led to sweeping expansion across the nation. The push for legalization in North Carolina began in 2019, and the Senate passed a measure in 2021 only to see it fail in the House by a single vote in 2022. North Carolina currently allows sports gambling at three tribal casinos.

Where the money goes

The bill allocates money from license fees and taxes to several different areas after the Department of Revenue and Lottery Commission receive money for expenses.

• $2 million annually for Department of Health and Human Services for gambling addiction education and treatment programs
• $1 million annually to North Carolina Amateur Sports for grants to local governments or non-profit organizations to expand opportunities for youth sports participation. Organizations in a single county can receive no more than 1% of the total funding.
• $300,000 to the athletic departments at Appalachian State, East Carolina, Elizabeth City State, Fayetteville State, North Carolina A&T, North Carolina Central, UNC-Asheville, UNC-Charlotte, UNC-Greensboro, UNC-Pembroke, UNC-Wilmington, Western Carolina and Winston-Salem State.
• $1 million to the North Carolina Heritage Advisory Council for grants to assist youth teams travel to events or attract events to North Carolina.
• Of the remaining proceeds: 20% to the athletic departments at the above colleges and universities; 30% to the North Carolina Major Events, Games and Attractions Fund; 50% to the state's General Fund. The Major Events, Games and Attractions Fund would provide grants to draw entertainment, musical, political, sporting or theatrical events, held no more than once a year, to the state's sports facilities and venues.

More gaming?

The opening of several Virginia casinos along the North Carolina border, particularly one in Danville, has sparked conversations among lawmakers about how to respond. But no bill has been filed, though Moore said there is draft legislation.

"There's been a lot of conversation about some, basically, state-sanctioned casinos, non-tribal casinos," Moore said Wednesday. "Look at what happened in Danville, Virginia. For example, looking at putting those in some economically distressed areas of the state."

A recent analysis of gambling studied the impact of three standalone casinos in Anson, Nash and Rockingham counties. It found that gross gaming revenue from those three casinos, if they were the only expansion of gambling in the state, would exceed $1.6 billion on an annual basis.

Berger, whose home county is just south of Danville, said the majority of cars in the casino's parking lot had North Carolina license plates, according to a friend who visited the facility.

"Not a scientific survey, but that doesn't surprise me," Berger said. "And I think that's the business plan for the folks in Virginia. Their intent is to draw money out of the state. I think we would be falling down on what we have a responsibility to do if we ignored that totally."

Rep. Harry Warren, R-Rowan, introduced legislation to legalize video lottery terminals, pitching it as a way to cut down on illegal sweepstakes machines. The bill received a committee discussion in May, but no votes were held. Moore said the concept should move forward, but said it will not be Warren's bill.

"It would get rid of a lot of the illegal operations that are around the state," Moore said. "And then secondly, it would be a an incredible source of revenue for the state."