by Jordan Roberts
Director of Government Affairs, John Locke Foundation
North Carolina may consider a sports betting bill in 2021. Senate Bill 688, a bipartisan Senate proposal, would legalize and regulate online and in-person gambling. After a 2018 Supreme Court case that legalized sports betting, many states have authorized the practice. The bill has yet to come up for a hearing this session, but some believe North Carolina might be the latest state to take the plunge into legalized sports betting after the Supreme Court opened the door.
How did we get here?
Despite the federal government and most state governments outlawing gambling on sports for decades, a recent Supreme Court ruling, Murphy v. NCAA, paved the way for states to legalize gambling. The facts of Murphy v. NCAA started in 2012 when New Jersey passed a bill legalizing sports betting. Following the passage of that bill, several professional sports leagues and the NCAA sued to stop sports betting in New Jersey and won in court. Despite this setback, New Jersey state lawmakers tried a different strategy a few years later. In 2014, the state repealed all previous statutes that prohibited sports betting. Instead of legalizing sports betting through a new statute, the state sought to authorize it by removing any mention of it from state laws. The sports organizations sued again, and courts up to the Third Circuit sided with the plaintiffs to stop the repeal of existing sports betting prohibitions. Eventually, the Supreme Court agreed to hear the case.
In Murphy v. NCAA, the Court had to decide whether the federal government overstepped its authority by forcing the New Jersey state legislature to carry out federal regulations which outlaw sports gambling under the federal Professional and Amateur Sports Protection Act (PASPA). In this case, the Court ruled in favor of New Jersey, holding that the federal government overstepped its authority by prohibiting the state from repealing laws that would authorize sports betting. The floodgates for state-level sports betting opened up after the ruling.
North Carolina’s sports betting bill
As of this writing, 21 states have some form of live, legal sports betting. North Carolina is one of a handful of states with legislation pending to legalize mobile and in-person gambling across the state for all eligible users. Current law only allows for in-person sports betting at two Cherokee casinos in the western part of the state. However, those locations are not operational yet.
SB 688, sponsored by Senator Jim Perry (R-Lenoir) and Senator Paul Lowe (D-Forsyth), would legalize sports betting for in-person and mobile options. The North Carolina House has an identical bill sponsored by a bipartisan group of members, but bill sponsor Jason Saine (R-Lincoln) said that he pulled this bill to focus on the Senate version. According to the language as filed, the bill would allow for residents to place bets on “single-game wagers, teaser wagers, 10 parlays, over-under, moneyline, pools, exchange wagering, in-game 11 wagering, in-play wagers, proposition wagers, and straight wagers.”
The bill would allow the North Carolina Lottery Commission to grant at least 10, but no more than 12, interactive sports wagering operator licenses. Applicants who are awarded a license would need to pay a one-time $500,000 start-up licensing fee. The license would be active for five years and can be renewed for $100,000. Additionally, each operator would have to pay an 8% tax on gross revenue. 50% of all tax receipts under this bill would go to the North Carolina Major Games, Events, and Attractions Fund, while the rest would go to the lottery commission.
Where is the support and opposition?
Sports betting around the country, and especially in North Carolina, is not a partisan issue. As I mentioned above, each chambers’ respective bill is sponsored by both Republicans and Democrats. There appears to be support and opposition within each of the party caucuses.
Supporters of the bill point to the fact that illegal sports betting already happens regardless of its legality. Illegal bookies and offshore websites provide an avenue to bet on sports easily. If this bill were to pass, supporters say, the state would be regulating and taxing an existing black market. Furthermore, the state would be able to collect tax revenue on what the sportsbooks bring home. Other states that legalized sports betting collect substantial tax revenues on the industry. For example, since New Jersey legalized sports betting in 2018, the state has collected nearly $150 million.
Some opponents of the bill take a moral opposition. One of the chief concerns from those against the bill is that the state shouldn’t sanction an activity that can lead to gambling addiction and disastrous personal consequences. These opponents say the bill may lead to financial ruin and the destruction of families. Others have less of a problem with the gambling aspect than the mechanism set up to spend a portion of the tax dollars collected from the licensed operators. My John Locke Foundation colleague, Jon Sanders, told Carolina Journal that he worries the “Major Events, Games, and Attractions Fund” could turn into another “massive incentives fund.”
It’s clear there is a lot of interest on both sides of the aisle to set up some sort of regulatory framework and start collecting tax revenue on sports betting. The bill is in its earliest stages as it has not yet received a committee hearing. If the Senate were to pass the bill, which has broad bipartisan support, including from Governor Roy Cooper, the House seems ready to take up the measure and attempt to move the legislation through their chamber. When a state legalizes sports gambling, there are several important implications for lawmakers to consider, and the future debate in North Carolina will be no different.