Introduction
North Carolina recently legalized sports betting, and the program is set to launch within the coming months. As such, we felt it appropriate to publish our analysis of the North Carolina sports betting market, which includes the estimated market size and tax revenue for the state.
Our analysis was inspired by a report from the Gaming Spectrum Group and is firmly rooted in the framework outlined in the Act governing sports betting in North Carolina. This study assumes that both digital (aka mobile) and in-person (aka retail) sports betting will be offered in North Carolina. Similarly, the report assumes you can bet on college and professional sports.
Our North Carolina sports betting market analysis is structured as follows:
Comparative Analysis and Demographics of North Carolina Sports Betting Market
We began with a comparable analysis between North Carolina’s demographic profile and that of similar U.S. states. Since the North Carolina sports betting market is not established, we used data from comparable U.S. states to gauge the per capita sports betting activity.
The data from analogous states served as a benchmark that allowed us to estimate North Carolina’s sports betting market size.
Our selection of states for this comparative analysis was guided by several key factors, including:
- Similarity in the types and quantity of sports teams.
- The duration for which these states have had established sports betting markets.
- Geographic proximity and relevance.
For example, as illustrated in Table 1, the average disposable income among the eight comparison states stood at $75,075, surpassing North Carolina’s per adult disposable income by 109%, which totals $68,706.
Table 1. Comparative Analysis
Furthermore, after collecting data from each state’s regulatory body, we ascertained that the average sports betting handle per adult in 2022 reached $836, and the typical sports betting winnings per adult amounted to $72.72 within these comparable states. By applying an adjustment factor based on this 8-state average index relative to North Carolina’s unique circumstances, we were able to calculate an approximate sports betting handle of $765 and sports betting winnings of $66.55 per adult in North Carolina (refer to Table 2 for further details).
Table 2. Estimated North Carolina Sports Betting Handle and Winnings
North Carolina Sports Betting Revenue Projections
With the estimated sports handle and per adult winnings in North Carolina, we can now forecast the revenue generated by the North Carolina sports betting market.
To calculate the North Carolina sports betting handle, we multiplied the adult population of North Carolina, which stands at 7,645,794, by the estimated handle per adult, equating to $765. The results suggest that North Carolina sports betting handle will reach $5,849,639,267.
Table 3. Estimated Statewide Gross Gaming Revenue
Furthermore, using the estimated hold per adult, which was previously calculated at 8.7%, we can project a statewide win (aka gross gaming revenue) of approximately $508,834,650. This equates to an average of $66.55 in winnings per adult annually.
Tax Revenue Estimates
North Carolina will levy an 18% tax on gross sports betting revenue, which is the total of all total of all wagers received by an interactive sports wagering operator (which includes any wagers funded by promotional credits) less the amounts paid as winnings.
As a result of this taxation framework, our estimation indicates that, upon reaching maturity, the North Carolina sports betting market is poised to contribute approximately $92,000,000 in annual tax revenue to the state’s coffers. This sum represents 18% of the estimated total North Carolina sports betting revenue, which amounts to $508,834,650, underscoring the substantial fiscal benefits anticipated from this burgeoning industry.
Conclusion
Our findings indicate that North Carolina’s sports betting market is promising. With estimated sports betting handle and winnings per adult of $765 and $66.55, respectively, we have projected a robust statewide sports betting market with a handle surpassing $5.8 billion.
Furthermore, our tax revenue estimation, with an 18% tax on gross sports betting revenue, suggests that North Carolina stands to gain approximately $92 million annually, reinforcing the potential financial windfall for the state. In the end, we hope that this analysis will contribute to informed decision-making as North Carolina enters the exciting world of sports betting.
If you’d like to connect with our North Carolina sports betting consultants, please schedule a call today.
