North Carolina’s New Sportsbook Reporting Mandate Adds Pressure on Bettors and Operators

North Carolina lawmakers have passed a wide-ranging tax bill that would require sportsbooks to report registered players who received at least $2,000 in winnings during the prior calendar year to the Department of Revenue. The measure, part of Senate Bill 595, aims to bring the state into compliance with federal reporting requirements. As someone who has spent decades observing the evolution of gaming regulation, I see this as another example of how tax policy can create friction between states, operators, and players.

The provision allows the Department of Revenue to 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. This has drawn immediate criticism from bettors, who point to North Carolina’s existing rules on gambling income. The reporting threshold is low enough to capture many recreational players, raising questions about enforcement and data privacy.

Bettors Face a Structural Disadvantage on Losses

Current North Carolina law does not allow bettors to deduct losses against winnings on their state return. 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. This mismatch already penalizes players.

Critics argue the new federal cap on deducting gambling losses at 90% compounds the issue. The reporting requirement would give the Department of Revenue access to detailed wagering records once a player exceeds the $2,000 annual threshold. Accounts on X highlighted that the department already shares data with the IRS and can cross-reference federal W-2G forms and 1040 returns.

One common concern is that the rule could apply backward in time. Commenters warned it “starts with last year.” Even some Republicans indicated that lawmakers have not settled the losses deduction question.

Lawmakers Position the Change as Technical Compliance

The North Carolina General Assembly 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, though the final version added the new sports betting reporting requirements.

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. 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.

From an industry perspective, this creates operational demands on sportsbooks. Operators must prepare systems to track and report player-level data at the $2,000 winnings threshold. Compliance costs could rise, particularly for smaller platforms.

A Parallel Push to Increase the Sports Betting Tax Rate

Running in parallel with SB 595 is a separate proposal to increase North Carolina’s sports betting tax 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.

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.

This dual pressure—tighter reporting and potential rate hikes—signals a structural shift in how the state views sports betting revenue. Operators already operate in a market where player acquisition costs are high and margins are under scrutiny.

Risks of Pushing Activity Toward Gray Markets

One clear risk is that these measures could discourage legal participation. Bettors who feel over-taxed and over-monitored may seek out unregulated channels. The absence of loss deductions at the state level already creates an uneven playing field compared with federal treatment.

Phil Berger’s reported support for allowing deductions suggests some openness to reform, but the path remains unclear. Without changes, the combination of reporting mandates and limited deductions could erode trust in the regulated market. Sportsbooks, in turn, face the challenge of maintaining player engagement while meeting expanded data demands.

The Bottom Line is that North Carolina’s tax bill reflects a broader tension between revenue collection and sustainable industry growth. Operators and client-partners should monitor how the Department of Revenue implements the $2,000 reporting threshold and whether loss deduction reforms advance before the June 30 budget deadline. This moment underscores the need for balanced policy that supports regulated sports betting rather than inadvertently driving activity elsewhere. Industry executives would be wise to engage with lawmakers on these issues to shape outcomes that preserve both compliance and commercial viability.