UNC System athletic departments reap greater benefits from sports betting tax revenue – Winston-Salem Journal

In the controversial House Bill 347, titled Sports Betting/Horse Race Betting, which was signed into law in 2023, is an 18% tax on the gross wagering receipts of the eight licensed sports betting operators.

The funding covers Appalachian State, NC A&T, UNC-Greensboro and Winston-Salem State University in the Triad and northwestern NC. All members of the UNC system, but UNC Chapel Hill and NC State are eligible.

Expectations were modest for the first 12 months, which began with the debut of mobile sports betting on March 11: at least a $300,000 commitment for each department.

That commitment was quickly achieved with a sprinkling of full-court dunks thanks to mobile betting on March Madness, the NCAA men’s and women’s basketball tournaments.

As of Sept. 30, there are $75.8 million in tax revenue, of which a total of just under $16 million in tax revenue has gone to the 13 members, or $1.23 million each.

That’s broken down to $821,206 in fiscal year 2023-2024 and about $400,000 so far in fiscal year 204-2025.

According to a Legislative Fiscal Analysis report, “the consensus revenue estimate calls for an additional $1.7 million to be allocated to each institution by the end of fiscal year 2024-25.”

That’s enough for Winston-Salem State University — for the first time — to pay for a portable batting cage for the softball team, as well as plans to add a women’s flag football team and double the equipment budget for every sport except football , who receives funds from the pot.

Etienne Thomas, WSSU’s athletic director, said the first fruits of the proceeds are “an increase in scholarships for athletic programs across the board, ensuring that every program received an increase this year and will do so again next year.”

For East Carolina University, the funding is intended to allow the athletics department to be self-sustaining rather than being subsidized through university expenses.

“This helps cover (our) deficit in the athletic department and we will be able to offer more scholarships in the future,” said ECU Director of Athletics James Dubose.

UNC Pembroke Athletics Director Dick Christie said the timing of the new funding “is huge. UNCP is in the doldrums athletically.”

Christie said the athletics department’s budget has shrunk during the COVID-19 pandemic due to declining enrollment. Online students do not pay a fee for athletics, he said.

“So the money from sports betting replaces significant lost revenue and provides a five-year glide path out of deficit spending.” It really helps us keep the lights on.”

Where windfalls come into play is from another section in HB347 that serves as a contingency funding mechanism.

Counting the $3.9 million dedicated to the 13 members of the UNC system, there are about $8.5 million in total annual commitments, which include: $2 million to the NC Department of Health and Human Services for a training and treatment program for gambling addiction; and $1 million each for the NC Amateur Sports Grants Program and the NC Outdoor Heritage Grants Advisory Council.

Tax revenues above $8.5 million are distributed three ways: 50% to the state’s General Fund; 30% to the NC Major Events, Games and Attractions Fund; and 20% for the 13 members of the UNC system.

It is now clear that the monthly payout amounts will get lower and lower with the sports seasons.

Industry analysts predict monthly betting totals should peak with the 12-team College Football Playoff in January, the Super Bowl in February and March Madness.

All of this indicates that the 13 members of the UNC system could reach $3 million per year.

A legislative analysis of HB347 projects about $40 million initially in all annual tax revenue and more than $100 million by 2029.

Steve Bittenbender, analyst at BetCarolina.com. said North Carolina could generate up to $128 million in tax revenue in the first 12 months.

Sen. Paul Lowe, D-Forsyth and co-sponsor of the Senate version of HB347, said he was “encouraged by the successful implementation of sports betting.”

“I am particularly pleased with the projected benefits for HBCUs and higher education in general.”

Lowe said that “while I am optimistic about these positive impacts, I also recognize that sports betting is a complex issue and believe that further data collection is essential to fully understand its wider effects.”

The September launch of the National Football League and the majority of college football contributed to a big jump in legal mobile sports betting in North Carolina.

Both sports combined, however, fell short of the record money spent during March Madness.

Account holders wagered $572.3 million on sports events, according to reports from the eight sports betting operators to the NC State Lottery Commission.

The highest monthly tally was $659.3 million from March 11 — when legal mobile betting debuted — through March 31, covering the men’s and women’s NCAA tournaments.

In terms of earnings, account holders earned $501.5 million in September compared to $333.7 million in August and a peak of $590.7 million in March 11-31. The total so far is $3.07 billion.

“The strong start to the NFL and college football seasons bodes well for North Carolina’s sports betting industry,” Bittenbender said.

“However, sustainable growth will depend on sustaining interest throughout the season. Sports betting is likely to implement strategies to encourage continued betting.”

BetCarolina.com analyst Chris Boan said “this first football season with legal betting is proving to be a very profitable one for North Carolina.”

“This shows that when managed effectively, government programs such as education can see significant benefits from legalizing betting.”

Bets are not permitted on youth sports, but may be placed on professional sports, college sports, eSports, certain amateur sports or other sporting events approved by the commission.

The financial windfall for the athletics department of the 13-member UNC System has not assuaged the concerns of opponents of the sports betting bill.

As was the case with previous votes on sports betting bills, the “no” votes were a mix of anti-gambling social conservatives and anti-poverty progressives.

During the HB347 debates, several lawmakers voiced their opposition.

Sen. Jim Burgin, R-Harnett, said he considers sports betting a public evil, comparing it to Roman soldiers casting lots at the foot of Jesus Christ’s cross.

Sen. Julie Mayfield, D-Buncombe, said HB347 removes regulatory safeguards and will cause gambling addictions to grow. “This bill will provide online casinos that will be available 24/7, 365,” Mayfield said.

Sen. Lisa Grafstein, D-Wake, said she fears the restrictions in HB347 are not enough and that gambling will be the reason people tune in to the games.

Rep. Abe Jones, D-Wake, said the state doesn’t need the projected revenue from sports betting compared to the risk of North Carolinians becoming addicted to online gambling through what’s allowed in HB347.

“This legislation is bad public policy that will hurt, not help, individuals and families,” Jones said.

The growth in tax revenue from sports betting doesn’t “allay any of the underlying concerns about promoting an activity that can be highly addictive and destructive,” said John Quinterneau, director of South by North Strategies Ltd., a Chapel Hill research firm specializing in economic and social policy.

“Technology only exacerbates this destructiveness, as people can bet on every aspect of a sporting event in essentially real time without even leaving their homes, and are encouraged to do so by the constant stream of in-game ads and reminders to make bets.”

“As the amount of money at stake increases, it’s only a matter of time before some form of scandal involving match-fixing or other misconduct by players or coaches occurs,” Quinterno said. “It will tarnish the reputation of a sport and a university, while undermining the public perception that the games themselves are fair and not rigged in any way.”

Quintero said he understands the appeal of providing tax revenue to the 13 members of the UNC system.

“Smaller schools are struggling and many have cut programs after the pandemic, but is promoting gambling really the answer?” Quinterno asked.

“Many of these same universities also face resource constraints to fund their core degree programs, but there is no dedicated source of additional funding for these programs.”

“In fact, many of the same schools that receive this money from athletics gambling, such as UNC Greensboro, are also actively seeking to reduce educational programs and offerings.

“The juxtaposition raises troubling questions about what the purpose of a university is and fuels popular skepticism about what modern universities actually value and whether they deserve public support.”