Taxing Online Sports Betting in North Carolina

Online sports gambling has taken North Carolina by storm since it became legal in early March. Fans across the state have been trying their luck with real-time sports betting, including diehard Carolina Hurricanes supporter Harry McLeod.

McLeod, who has been a fan of the Hurricanes since he was a young boy, recently placed a bet on his favorite team to win Game 5 of their second-round series against the New York Rangers. However, what he didn’t realize was how his bets would impact his taxes come next season.

The current tax code in North Carolina does not allow residents to deduct losses from online sports gambling, meaning that even if McLeod lost more money than he won, he would still be taxed on his winnings. This revelation left McLeod feeling blindsided and concerned about the financial implications of his gambling activities.

N.C. State Accounting Professor Nathan Goldman emphasized the importance of taxpayers being aware of the tax implications of online sports betting. He highlighted the discrepancy between the state tax code, which does not allow for deductions on gambling losses, and the IRS policy, which permits itemized deductions for wins and losses.

Governor Roy Cooper also weighed in on the issue, calling for legislators to address the unfair tax treatment of online sports gambling winnings without the ability to deduct losses.

As licensed sportsbooks like DraftKings, FanDuel, and BetMGM continue to gain popularity in North Carolina, the need for updated tax laws to protect taxpayers, especially lower-income individuals, becomes increasingly urgent. With the potential financial impact of online sports gambling on the line, McLeod and others are advocating for a fair and equitable tax system that considers both wins and losses in the calculation of taxes.