North Carolina Tax Bill Would Require Sportsbooks to Report Bettors With $2,000 in Winnings
North Carolina lawmakers have passed a tax bill that would require sportsbooks to report bettors with more than $2,000 in annual winnings to the state. The measure has drawn criticism from players over the state's gambling tax rules.
The North Carolina General Assembly has passed a wide-ranging tax bill that would affect sports bettors, tech entrepreneurs, timber farmers, and ordinary property owners. One provision has drawn a loud reaction as it proposes that sportsbooks provide the Department of Revenue with information on registered players who received at least $2,000 in winnings during the prior calendar year.
The reporting requirement applies to registered players who received at least $2,000 in winnings during the prior calendar year. Lawmakers say it will bring North Carolina into compliance with federal reporting requirements.
Under the proposal, the Department of Revenue could request a qualifying bettor’s name, tax identification number, address, wagers placed, wager outcomes, winnings, and other information deemed necessary to determine compliance with state tax law.
The proposal immediately drew criticism from bettors because of how North Carolina already taxes gambling income.
Current North Carolina law does not allow bettors to deduct losses against winnings on their state return. That means a recreational gambler who wins $2,000 and loses $2,000 over the course of a year can still owe state income tax on the full gross amount.
Bettors Fear Increased Tax Enforcement
Critics say the recent federal change compounds the squeeze by capping the deduction of gambling losses at 90% on the federal return.
Accounts on X argue that the reporting requirements would effectively give the state Department of Revenue access to detailed wagering records once a player exceeds the $2,000 annual threshold.
They noted that the department already has a data-sharing arrangement with the IRS and can see federal W-2G forms and 1040 returns, which means the state would know exactly who should have reported and did not:
One common concern was that the rule could look backward in time, with commenters warning it “starts with last year.” Even some Republicans indicated that lawmakers have not settled the losses deduction question.
WRAL reporter Brian Murphy posted that Senate leader Phil Berger told him he now supports allowing deductions of losses and believed SB 595 already included such language:
Lawmakers Defend Last-Minute Changes
Lawmakers approved the conference report for Senate Bill 595 this week. It must now be formally enrolled before it heads to Gov. Josh Stein.
Sponsors described the legislation as a technical update to the state’s tax laws, although the final version also added new reporting requirements for sports bettors.
Critics say lawmakers added some provisions late and never fully vetted them. Sen. Tom McInnis, who helped write the bill, acknowledged that the final bill had “a couple of late provisions that some of you didn’t see” while defending the work that went into it.
Separate Proposal Would Raise Sports Betting Tax
Running in parallel with SB 595 is a separate proposal to increase North Carolina’s sports betting tax. It would increase it from 18% to 23% of sportsbooks’ gross wagering revenue.
Any such rate increase would come through the 2026 budget bill, which lawmakers face a June 30 deadline to pass. WRAL reported that a House budget writer confirmed the chamber had agreed to raise the tax through budget language, prompting widespread coverage. However, no enacted bill carries the increase, so this remains a plan for now.
Lawmakers debated an even steeper increase last year, with the Senate approving legislation to double the tax rate to 36%. That proposal ultimately failed after the House and Senate could not reach an agreement before the legislative session ended.
If North Carolina introduces the tax hike, it would join several other states that have followed suit, including Illinois, Ohio, Maryland, Louisiana, and New Jersey.
SB 595 now heads to Gov. Josh Stein. Meanwhile, lawmakers continue negotiating the proposal to raise the state’s sports betting tax. Bettors will also be watching whether legislators ultimately revisit North Carolina’s prohibition on deducting gambling losses from state income taxes.
Gambling Insider delivers the latest industry news, in-depth features, and operator reviews that you can trust. Our team combines rigorous editorial standards with decades of specialized expertise to ensure accuracy and fairness. We are committed to delivering clear, impartial, and dependable coverage across the global gambling sector.
