Despite the legislature seemingly making progress toward legalization Wednesday morning and afternoon, including passing one sports wagering bill, SB 38, by a 51-50 margin, a second bill, SB 688, failed its second reading on the House floor by the same margin, 51-50 against.
The two bills as written were working in tandem, and Rep. Jason Saine recently told WRAL passage of both was needed for successful legalization of mobile wagering.
“In conversations with the governor’s staff, if he does not receive both bills, then he won’t sign them into law,” Saine told WRAL.
With SB 688 failing, North Carolina likely won’t legalize mobile sports betting in 2022. Saine told WRAL later in the day that sports betting legislation “isn’t totally dead” this session, but that’s not exactly a ringing endorsement for imminent legalization. The legislative session ends on June 30.
.@JasonSaine97th on sports gambling: "It's not totally dead … We may end up with a bill before the end of session that will serve for sports betting. Don't know yet." So clear as mud. https://t.co/OdsSXf2IoU #ncpol
— Brian Murphy (@MurphinNC) June 22, 2022
What went wrong?
Saine told Sports Handle before the 2022 legislative session began that he believed there was enough support in the House to legalize mobile sports betting this year. During committee hearings Wednesday, it seemed like his belief was justified. Unfortunately for Saine and other sports betting backers, several House members were vehemently opposed to any wagering bills being passed.
In a shocking twist during discussion on the House floor, the House adopted an amendment that would prohibit betting on all college sports. For a state like North Carolina with several Power 5 college athletic programs, including basketball powerhouses Duke and UNC, that would likely lead to a significant reduction in potential tax revenue created through sports betting.
Whoa. An amendment adopted in the North Carolina House will ban wagering on college sports.
Mobile sports wagering bills may pass in coming days, but legally wagering on Duke, UNC, any other college contests, is no longer included.
— Bennett Conlin (@BennettConlin) June 22, 2022
The amendment didn’t merely ban betting on in-state teams, as several other states with legal wagering do. It would have prohibited all college sports betting.
Some legislators brought up concerns about college athletes being corrupted by sports wagering.
“Why do that to sport, which is supposed to be pure and it’s supposed to be honest?” Rep. Marcia Morey, a former Olympic swimmer and former NCAA investigator, said. “Putting gambling on top of that makes gambling the spotlight, and it puts the event in the shadow.”
Others during the discussion suggested gambling is immoral and shouldn’t be encouraged in North Carolina.
“The one opinion that matters to me, the one judgment to me that matters, is what does Jesus think,” Rep. Larry Pittman said. “It’s very clear from his word what he thinks of these two bills, and I’m gonna be on his side and vote ‘No.’”
It was a hectic House floor discussion with numerous emotional pleas to vote against the bills.
Looks like Rep. Jeffrey Elmore, R-Wilkes, is the guy who derailed the sports betting bill. Voting yes on one bill but no on the other, which meant one passed 51-50 and other failed 50-51 #ncpol #ncga pic.twitter.com/IkfRCO1GU5
— Colin Campbell (@RaleighReporter) June 22, 2022
What was in the bills?
SB 38 proposed that mobile sports betting operators in North Carolina pay a 14% privilege tax of adjusted gross revenue, an increase from the 8% tax rate proposed initially in SB 688. SB 38 included a $1 million license fee and a $1 million fee for license renewal, while SB 688 included a $500,000 license fee and a $100,000 fee for renewal.
Following various committee amendments, SB 38 would have sent $2 million of annual tax revenue to the Department of Health and Human Services for gambling addiction treatment and addiction programs. An additional $500,000 each year would go to the North Carolina Division of Parks and Recreation, which could then issue $5,000 grants to counties in North Carolina for youth sports development.
Of the remaining tax revenue, 60% would go to the state’s general fund, and 30% would go toward the North Carolina Major Events, Games, and Attractions Fund. The final 10% would go toward athletic departments of HBCUs within the state, as well as UNC-Asheville and UNC-Pembroke. At minimum, $300,000 would be sent to seven HBCUs annually.
SB 688 had similar language, although slightly different tax revenue distribution, most notably 50% would go toward the North Carolina Major Events, Games, and Attractions Fund.
Each bill would have allowed for 10-12 mobile operators in the state, and it was expected that major operators like DraftKings and FanDuel would enter the state’s sports betting market. Betting would be allowed on professional sports, and several major sports stadiums in the state could be granted licenses for retail and mobile wagering purposes.
Retail sports betting is currently legal and operational at a pair of tribal-owned casinos in North Carolina. Mobile betting, while legal and operational in neighboring Tennessee and Virginia, hasn’t yet been legalized in North Carolina.
If Rep. Saine and other sports betting supporters pull together an unexpected passage of a mobile wagering bill, North Carolinians could be using legal mobile betting options in early 2023. If mobile sports betting fails to be legalized this session — seemingly the most likely outcome after Wednesday’s events — Saine and others may have to wait until the 2023 session to attempt to pass mobile sports betting legislation.