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Sunday, April 14, 2024

N.C. sports betting, here we go

This will be the last Super Bowl when one can’t place a legal bet in North Carolina. We assume all Daily Digest and Business North Carolina readers are too honest to have wagered on the Big Game in the past.

Fortunately for gamblers, state lawmakers have authorized sports betting with a March 11 start date, just in time for the ACC basketball tournament. They say it will discourage illegal betting, boost state revenues and add a fun entertainment option. Opponents, who got squished by the gaming industry’s powerful lobby, say it will promote gambling addiction.

Here are some highlights about what’s ahead as the industry rolls out, with some data not mentioned in the countless TV and digital ads promoting this new entertainment option.

This information is mostly taken from the N.C. General Assembly’s fiscal note about the industry. The report was completed last May, before Gov. Roy Cooper signed the bill into law in June.

It’s still considered accurate, according to people familiar with the industry:

  • Wagering is expected to reach $3.9 billion in the first year, then attain $6.6 billion in the third year. Sounds mind-boggling, but gamblers in Virginia reported gross sports gaming revenue of about $5.6 billion last year, according to the Virginia Lottery. Virginia has about 2 million fewer residents than North Carolina and legalized sports betting in 2021.
  • The 12 licensed operators are expected to pay out 91% of the wagers as “winnings.”  (The money not paid back to “winners” would then be an expected $350 million in the first year, and nearly $600 million in the third year. This is my estimate, not the legislative staff, based on 9% of total wagers.)
  • The state’s general fund expects to collect a net $36 million in the first two years, then about $43 million on average over years three and four. Most of this relates to per-wager tax. The state’s “special fund revenue” will range from about $17 million in the first year to about $27 million in the fourth year.
  • So the “net state impact” is about $70 million a year once the industry is entrenched.
  • In addition to boosting the general fund, the state has specific plans for spending some of money, including $2 million for “gambling addiction education and treatment programs,” $1 million to N.C. Amateur Sports for aiding youth sports groups; $1 million to the N.C. Outdoor Heritage Advisory Council for travel expenses and attracting nonprofessional sporting events; and $3.9 million split evenly in year one between 13 UNC institutions’ athletic programs. (No money is going to UNC Chapel Hill and N.C. State University.)
  • As many as 12 interactive sports wagering licensees will each pay $1 million for a license, then $1 million for a five-year renewal. These are mostly gambling companies that offer similar services in many other states, like FanDuel and DraftKings. These fees will cover expenses of the Lottery Commission, which is regulating the business with plans to add 12 new state jobs and have annual operating costs of about $2.5 million.
  • About 66% of North Carolina voters support legalized sports betting, according to an Elon University poll last May.
  • As many as 5% of gamblers will “develop a problem or pathological gambling issue,” according to the N.C. Family Policy Council, which tried to block sports betting.

How the money is divided between the gambling business and sports group is private information.

As we previously reported, these companies below are seeking licenses to offer N.C. betting. Each was required to affiliate with sports groups in the state, an unusual arrangement that shows the influence of the pro sports industry in North Carolina:

  • DraftKings – a Boston-based company. (NASCAR)
  • ESPNBet — a combo of Wyomissing, Pa.-based Penn Gaming and ESPN/ABC owner Disney. (Quail Hollow Club, host of the annual PGA event.)
  • FanDuel – owned by London-based Flutter, a public company  (PGA Tour)
  • BetMGM – joint venture between New York- based Vici Properties, a public company, and Entain, a British gambling company. (Charlotte Motor Speedway)
  • Bet365 – a private British gambling company. (Charlotte Hornets)
  • Fanatics – a private Jacksonville, Fla.based company expected to have an IPO this year. (Carolina Hurricanes)
  • Underdog Sports- a private Brooklyn, N.Y.-based company. (McConnell Golf, which operates 16 golf properties in the Southeast.)
  • Caesars Sportsbook, in partnership with the Eastern Band of Cherokee Indians. The Cherokees have had sports betting at their two N.C. casinos since 2019.
  • Catawba Two Kings Casino in Kings Mountain. (No affiliate signed as of this week.)
David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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