Taking a Gamble on Sports: North Carolina Joins the Sports Betting Industry

By: Basia Peragine                                                                          Posted: 05/13/2024

Shuffling the Deck: Legislation Leading Up to the Legalization of Sports Betting

After a Supreme Court ruling in 2018, sports gambling took off in the United States, with twenty states and the District of Columbia offering mobile sports betting.[1]  After only a few years, twenty eight states and the District of Columbia now offer in-person betting, including North Carolina.[2]  In 2022, North Carolina attempted to join the twenty states offering mobile sports betting, but the online sports betting bill faltered in the House.[3]  The bill fell in the face of anti-gambling concerns, with several representatives holding the opinion that state sanctioning of sports betting would only further issues such as gambling addictions, which would in turn increase theft, embezzlement, and people in debt.[4]  One year later and with a new legislative session in action, the House voted 69-44 for a bill authorizing statewide mobile sports and horse-race betting [5]  The same week, Gov. Roy Cooper signed the bill into law.[6]  The law directed the North Carolina Lottery Commission to issue up to twelve sports wagering licenses to entities that offer mobile and online sports betting customers.[7]

This bill, better known as the Sported Wagering Act, amended 18C of the General Statutes in North Carolina.[8]  The legislation itself defined the scope and role of sports betting and the role that regulatory parties will play in it.[9]  The North Carolina Lottery Commission will oversee the issuance of sports wagering licenses ensuring that operators meet stringent criteria.[10]  Furthermore, once licensed, operators have a duty to adhere to operational guidelines and include implementing geofencing technologies to confirm bettors’ locations and ages.[11] As a result of non-compliance, the bill mandates civil or criminal penalties, including fines, license suspension or revocation.[12]  Furthermore, sensible gambling is a core concern of North Carolina’s approach to legal gambling.[13]  With that in mind, the Act puts into place mechanisms to support individuals in managing their gambling behaviors.[14]  Therefore, through stringent licensing requirements, the state hopes to ensure the integrity of bettors and sports competitors alike.[15]

Dealing the Cards: Sports Betting in Effect in North Carolina

On March 11, 2024, mobile and online sports gambling went into effect in North Carolina, nine months after legislation passed that authorized this activity statewide.[16]  According to the bill’s supporters, regulating and taxing sports betting would allow for the state to control gambling that otherwise was happening underground or across state lines in Tennessee and Virginia.[17] Furthermore, legislative analysts predicted that state control of sports gambling would positively effect the economy.[18] While the legislation would tax sports wagering at a rate of around 18% of gross betting revenues minus winnings, legislative analysts explained that much of the sports wagering tax revenues would go to local, regional, and state initiatives as well as problem gambling programs.[19]  Through this, analysts estimated that the state would take in $71 million annually by mid-2028.[20]

Full House: North Carolina’s In State Opportunities

The North Carolina State Lottery Commission issued eight sports betting licenses in the state, including: BETMGM and Underdog Sports Wagering, FanDuel Sportsbook, DraftKings, Fanatics Sportsbook, bet365, ESPN BET, and an entity associated with the Eastern Band of Cherokee Indians, which already operates in-person sports gambling.[21]  That said, the North Carolina law also required sportsbook operators to tie themselves to a professional sports entity in the state, bolstering in-state opportunities and revenues.[22]  The hope is that this requirement could incentivize the expansion of professional sports in North Carolina by allowing any additional professional sports organization that comes to NC to add additional licenses and allow for more operators.[23]  Furthermore, unlike other states, who prohibit betting on in state colleges and proposition bets, or prop bets, on individual college athletes, North Carolina features no such restrictions.[24]

The timing of the opening of sports betting in North Carolina was well planned.[25]  Not only did betting go live just one day before the Atlantic Coast Conference Tournament tip off, but it also proceeded one of the busiest times of year for the sports world.[26]  North Carolina bettors will now be able to place bets on events such as the NCAA tournament, the PGA tour, MLB opening day, and many more.[27]  With this, the top sportsbooks that have launched in the state are offering more than $2,000 worth of incentives for those who use their platform, further incentivizing bettors.[28]  Further, some analysts argue that the financial impact of legal sports betting in North Carolina has been undervalued-with some projections estimating over $90 million in revenue yearly.[29]  That said, only time will tell what the impact of legal sports betting will be on North Carolina’s economy and constituency.[30]

A Tough Hand: Possible Legal Implications of Legal Online Sports Gambling

Although North Carolina has made efforts to show its support for problem gamblers and responsible gambling initiatives, people are still concerned about the impacts of gambling.[31]   Professor Sean McKeever, in particular, discusses how widespread legal gambling can affect the integrity of sports.[32]  In his analysis, he notes that sports gambling is special because it creates a threat to an otherwise valuable social activity—sports .[33]  History shows that the money behind gambling has interests of its own and can lead to corruption, such as the 1919 “Black Sox” scandal in which eight Chicago White Sox players plotted to fix the World Series for a payout of around $100,000 each.[34]  Especially now in the age of NIL, Professor McKeever points out that the income disparity between athletes coupled with sports betting creates an environment where a scandal is likely.[35]  With yet another state joining those that allow online gambling, a scandal may be even closer than we realize, according to Professor McKeever.[36]

Aside from a sports scandal, people have shown a strong interest in preventing gambling addictions in other states.[37]  For example, in states such as Massachusetts and New York, sports betting marketing was limited to prevent developing problem gamblers in minors.[38]  Maryland and Connecticut are also limiting sports betting initiatives to prevent problem gambling, preventing companies from signing deals with public universities so that public universities are not encouraging students to gamble.[39]  Although North Carolina already has regulations in place to prevent problem gambling, legal challenges may arise to increase the protocol to prevent problem gamblers, or to stop the University of North Carolina from benefiting from sports gambling.[40]

[1] See Gary D. Robertson, North Carolina Sports Betting Legislation Falters in House, Associated Press (June 22, 2022, 9:56 PM), https://apnews.com/article/sports-auto-racing-north-carolina-betting-54a0978974de5d80f141d3fcbd08a84c (noting when sports betting became legal in United States).  In Murphy v. National Collegiate Athletic Association, the Supreme Court struck down the Professional and Amateur Sports Protection Act on Tenth Amendment and anti-commandeering grounds, holding that the federal government could not disallow states from sports gambling.  See Ronald J. Lampard, Supreme Court Strikes Down Federal Law that Prevented Gambling on Sports, Am.  Legis. Exch. Couns. (May 15, 2018), https://alec.org/article/supreme-court-strikes-down-federal-law-that-prevented-gambling-on-sports/#:~:text=The%20United%20States%20Supreme%20Court%20struck%20down%20the,could%20not%20prevent%20states%20from%20legalizing%20sports%20gambling (summarizing Supreme Court case leading to legalization of sports betting).

[2] See Robertson, supra note 1 (quantifying number of states already offering sports betting in‑person).

[3] See id. (explaining how older sports gambling bill failed in North Carolina).  “The House voted 51-50 not to approve one of two measures that, when combined, would have established the rules to authorize and regulate gambling on professional sporting events and out-of-state horse racing[.]”  See id. (noting how close bill was to passing).

[4] See id. (quoting North Carolina Representative, Jay Adams).  “This is just another opportunity to create unfortunate opportunities for people who can’t resist.”  (internal quotations omitted) (explaining how online gambling creates another opportunity for gamblers to give into their vice).

[5] See Gary D. Robertson, North Carolina Lawmakers Approve Sports and Horse-Race Gambling, Bill Now Heading to Governor, Associated Press (June 7, 2023, 7:18 PM), https://apnews.com/article/north-carolina-legislature-sports-gambling-governor-0d07f1977196636e2d350497a9059b9b (noting attitude towards bill not passing first time).  “The defeat ‘gave us the opportunity to work harder’ and build support for the measure this year, Rep. Jason Saine, a Lincoln County Republican and the chief bill sponsor, said at the ceremony.”  See North Carolina Governor Signs Sports, Horse Racing Betting Law; Wagering Could Begin in Early 2024, Associated Press (June 14, 2023, 12:10 PM), https://apnews.com/article/north-carolina-sports-gambling-horse-racing-law-6ea5960f10d661e571146a3bbc9d1e53 (explaining how bill being rejected was motivator for its supporters).

[6] See Gary D. Roberston & Erik Verduzco, North Carolina Launches Statewide Sports Wagering, Associated Press (Mar. 11, 2024, 6:43 PM), https://apnews.com/article/north-carolina-sports-wagering-gambling-9a3689245f942e0750e4abd44675edea (quoting Governor Cooper).  “The legalization of sports betting will provide a significant boost to North Carolina’s economy and will allow our thriving sports industry to continue to grow. . . .”  See id. (internal quotations omitted) (showcasing governor’s support for legalized sports gambling).

[7] See Robertson, supra note 5 (noting that “entities . . . would be subject to extensive background checks and $1 million application fees”).

[8] See Ryan Leaver & Mac Douglas, North Carolina Sports Betting: Overview of Laws and Regulations, Advance Loc. Media (Feb. 22, 2024; 9:04 AM), https://www.syracuse.com/betting/north-carolina/regulations/ (providing legal framework and origins of bill).

[9] See id. (highlighting how legislation defines roles for sports betting).  The bill outlined the types of betting activities that were allowed, the role that regulatory bodies would play in sports betting, and the obligations for both operators and participants.  See id. (reaffirming strictness and thoroughness of sports betting bill).

[10] See id. (listing financial stability, operational integrity, and compliance with state regulations as primary factors).

[11] See id. (emphasizing role of Operations).  Operators have a duty to maintain integrity, ensure fair play, and adhere to regulatory standards.  See id. (furthering requirements of being operator).

[12] See id. (explaining what compliance for sports betting operations looks like).  Complying with state regulations includes accurate record-keeping, on-time reporting, and cooperation with regulatory bodies.  See id. (providing example of required behaviors).

[13] See id. (highlighting North Carolina’s focus on responsible gambling).  For further discussion on how North Carolina focuses on responsible gambling, see infra note 14.

[14] See id. (noting different responsible gambling programs).  In a “voluntary exclusion program”, bettors can self-exclude themselves from sports wagering activities across all platforms, as a proactive measure to help those who recognize the need to take a step back from gambling.  See id. (emphasizing preventative measures).  Furthermore, North Carolina is making concerted efforts through educational resources, support services, and promoting awareness about gambling issues.  See id. (listing other ways in which North Carolina hopes to curb irresponsible gambling).

[15] See id. (highlighting goal of all regulations and measures North Carolina is putting into place).

[16] See Roberston & Verduzco, supra note 6 (summarizing journey to legalized sports gambling in North Carolina).  For further discussion on how sports betting was legalized, see supra notes 1-7 and accompanying text.

[17] See Robertson, supra note 5 (recognizing that sports gambling is continuing with or without legalization in North Carolina).

[18] For further discussion on how sports gambling would be positive for North Carolina’s economy, see infra notes 11-12.

[19] See Robertson, supra note 5 (clarifying where money from tax revenues as result of sports betting will go).

[20] See id. (noting that combination of sports wagering and horse betting as result of new law would generate $71 million).

[21] See Gary D. Robertson, 8 Sports Wagering Operators Are Licensed in North Carolina to Take Bets Starting March 11, Associated Press (Feb. 29, 2024, 11:45 PM), https://apnews.com/article/north-carolina-sports-gambling-licenses-3705cbab0b64f12b2babab503fbc562c (naming sport wagering companies who submitted successful initial applications for sports wagering operator licenses).

[22] See Catena Media, North Carolina Takes a Unique Approach to its Online Sports Betting Launch, Buff. News (Mar. 18, 2024), https://buffalonews.com/betting/nc-sports-betting-launch-takes-unique-path/article_aa546885-c08f-5dd6-8c26-db9b07328b96.html#:~:text=There%20are%20many%20positives%20to%20legalizing%20sports%20betting,reduce%20the%20use%20of%20offshore%20and%20illegal%20operators (listing sportsbook providers and their partners).  The eight operators and their partners are: Bet365 with the Charlotte Hornets, BetMGM with the Charlotte Motor Speedway, Caesars with the Eastern Band of Cherokee Indians, DraftKings partnered with NASCAR, ESPN Bet with the Quail Hollow Club, Fanatics with the Carolina Hurricanes, FanDuel with the PGA tour, and Underdog with the Sedgefield Country Club.  See id. (clarifying partnership agreements in place).

[23] See id. (noting that if state does not have casino industry, sports wagering access may be tied to professional sports team).

[24] See id. (recognizing how liberal new legislation is in North Carolina compared to other states).

[25] For further discussion on why the timing for North Carolina legalizing sports betting is well set, see infra notes 18-20.

[26] See Zachary Hanshew, Everything to Know as North Carolina Launches Sports Betting on March 11, Sportsbook Rev. (Mar. 1, 2024, 7:21 PM), https://www.sportsbookreview.com/news/everything-to-know-as-north-carolina-launches-sports-betting-march-1-2024/ (listing upcoming sports events after North Carolina Sports Betting).

[27] See id. (providing both events and dates for events that can be bet on).

[28] See David Caraviello, Best North Carolina Sports Betting Promos, Offers & Bonuses for NCAA Tournament, Charlotte Observer (Mar. 20, 2024, 3:00 PM), https://www.charlotteobserver.com/betting/article286919635.html (recognizing offers that new users will receive when wagering on NCAA tournament games).

[29] See Michael Molter, North Carolina Sports Betting Impact Being Undervalued, Leg. Sports Betting (Jan. 29, 2024, 11:16 AM), https://www.legalsportsbetting.com/news/north-carolina-sports-betting-impact-being-undervalued-01-29-2024/ (comparing North Carolina to other states sports betting markets).  “By comparing to the Pennsylvania, Ohio, Arizona, and Virginia sports betting markets, North Carolina should handle around $9.5 billion by the end of 2025.”  See id. (using other states sports betting markets as reference for revenue North Carolina will likely see).

[30] See id. (explaining how North Carolina will see positive impacts on economy from sports betting)  “No matter how large or small the market, North Carolina will come out ahead.”  See id. (emphasis omitted) (emphasizing money to be made from legal sports betting).

[31] For further discussion on why people are concerned about the impacts of gambling, see infra note 32-40 and accompanying text.

[32] See Jay Pfeifer, Legal Sports Betting in NC Will Bring Revenue and Ethical Challenges. It Could Also Set the Stage for a Cheating Scandal, Davidson Coll. (Mar. 6, 2024) https://www.davidson.edu/news/2023/06/13/legal-sports-betting-nc-will-bring-revenue-ethical-challenges (discussing concerns of Professor of Philosophy Sean McKeever).

[33] See id. (clarifying how sports betting is different than other kinds of gambling).  As opposed to other forms of gambling such as poker which has no real value outside of gambling, sports have a real value outside of gambling.  See id. (emphasizing value of sports).

[34] See id. (analyzing risk of fixed games).  See also Evan Andrews, What Was the 1919 ‘Black Sox’ Baseball Scandal?, Hist. (Aug. 24, 2023) https://www.history.com/news/black-sox-baseball-scandal-1919-world-series-chicago (recounting world-series fixing scandal).  “Gandil later claimed he was initially skeptical that it could work, but he eventually agreed that he and a few co-conspirators would throw the series in exchange for a hefty payout of around $100,000.”  See id. (quoting C. Arnold “Chick” Gandil, who had first proposed throwing games for money).

[35] See Pfeifer, supra note 32 (recognizing that NIL payouts and sports betting opportunities can create risks for fixing games).  According to McKeever, almost every athlete cares deeply that games are won on the basis of fair play, and if that ceased to exist, most athletes would feel that what they had love about sports had been lost—this coupled with situations where some players are earning significant money while others earn little or nothing is ripe for trouble.  See id. (explaining how NIL can exasperate risks associated with legal sports betting).

[36] See id. (using prior case of fixed-games as example).

[37] See Eric Lipton and Kevin Draper, First Came the Sports Betting Boom. Now Comes the Backlash., N.Y. Times (May 13, 2023) https://www.nytimes.com/2023/05/13/sports/online-sports-gambling-regulations.html (summarizing concerns from states about expansion of legalized sports betting).

[38] See id. (summarizing initiatives by Massachusetts and New York).  Massachusetts formally banned marketing on college campuses and prohibited advertising aimed at minors and New York prohibited sports betting marketing outfits from getting paid commission.  See id. (explaining new state initiatives).

[39] See id. (further explaining state led sports betting limitations).

[40] For further discussion on why legal challenges may arise, see supra note 32-39.