North Carolina is one step closer to changing several tax rules tied to its legal online sports betting market after lawmakers approved a wide-ranging revenue bill. Senate Bill 595, titled “Various Revenue Laws Changes,” has cleared the General Assembly and now awaits action from Gov. Josh Stein. While the legislation covers many tax issues, it also includes several provisions that directly affect licensed interactive sports wagering operators and some players who collect gambling winnings.
The proposed changes touch three main areas. They update how taxable sports wagering revenue is calculated, expand the information the Department of Revenue can request from operators about successful bettors, and establish a new state income tax withholding requirement for certain gambling winnings beginning next year.
Changes to sports betting taxes and reporting in North Carolina
One revision updates the definition of gross wagering revenue for licensed interactive sports wagering operators. Under the bill, that figure continues to represent the total money received from sports wagers after subtracting winnings paid to players, but before deducting expenses, fees, or taxes.
The legislation also clarifies how promotional offers are treated for tax purposes. If a bonus or promotional credit is returned to an operator as a deposit or used to place a sports wager, its cash value would be included when calculating gross wagering revenue.
Another section gives the North Carolina Secretary of Revenue broader authority to request information from operators. The secretary could make such a request no more than once during each calendar year.
If requested, operators would have to provide records for every registered player who received at least $2,000 in winnings during the previous calendar year. Required information would include a player’s name, tax identification number, address, and other identifying details.
Operators also would need to report the total amount of wagers placed, the outcomes of those wagers, the winnings paid to each player, and any additional information already in their possession that the secretary determines is necessary to evaluate compliance with state tax laws.
The bill also creates a new withholding requirement for licensed interactive sports wagering operators and advance deposit wagering licensees. Whenever federal law requires gambling winnings to be subject to withholding under an Internal Revenue Code, operators would also have to withhold North Carolina income tax.
The amount withheld would match the state’s individual income tax rate, which means operators would be responsible for filing returns, paying the withheld taxes, and reporting those amounts using the same procedures that apply to wage withholding. Money withheld would be held in trust for the Secretary of Revenue.
In other news, it was reported that it would also introduce a 6% tax on prediction market operators, after Stein signed an executive order in May banning North Carolina state employees from using insider knowledge to bet on platforms.
If signed into law, the withholding requirement would take effect January 1, 2027, and would apply to gambling winnings paid on or after that date. The sports wagering provisions remain part of the broader revenue package now awaiting the governor’s decision.
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