A W-2G is still triggered at a threshold of $2,000 in winnings, under the proposal being negotiated in the state legislature.
North Carolina sports bettors will be allowed to deduct their gambling losses under revised rules being negotiated as part of a proposed state budget, WRAL in Raleigh reported over the weekend.
The change would be effective retroactively to Jan. 1, 2025, according to the report.
NC is currently one of 10 states that do not allow gamblers to deduct losses.
The allowance makes another new rule in North Carolina, one that would require sportsbooks to report a customer’s winnings of $2,000 or more in a given year to the state, less punitive than originally thought.
Still, a bettor who wins at least $2,000 at a single sportsbook in the state will receive a W-2G from the operator and be subject to the new federal rule capping gambling tax deductions at 90%. So, if a player has $2,000 in winnings and $2,000 in losses on FanDuel, for example, he’d owe federal income tax on $200.
Nationally, W-2G is also triggered when a sports bettor wins at least $600 on a wager at 300-to-1 odds or longer.
Regardless of whether a player in any state is issued a W-2G, however, he is technically required to report ALL gambling wins and losses to the IRS. If you win $5 at your neighborhood poker game, in other words, you’re supposed to tell the tax collectors.
In reality, not many recreational bettors actually do this. Win amounts under any threshold that prompts a W-2G, and no one is the wiser, is the hope. If NC bettors hit the new $2,000 mark on one of their sportsbook apps, a W-2G would require them to include the winnings on their 1040.
Sports Betting Tax Increasing for NC Sportsbooks
The budget proposal, which still needs votes in both chambers before being sent to the desk of NC Gov. Josh Stein, increases the tax sportsbooks pay on revenue from 18% to 23%.
While that’s been widely reported and expected in North Carolina, tax increases on operators are never welcome development for the sports betting industry. The expense is ultimately passed on to the customer via worse odds, player advocates contend, potentially pushing players to unregulated and black-market operators.
A 6% tax on prediction market operators is also included in the budget, per WRAL, although companies like Kalshi and Polymarket won’t fork that over easily. The state of Kentucky, which wants to impose a 14.25% tax on prediction markets, is being sued by the Coalition of Prediction Markets and the CFTC, which contend the exchanges are regulated by the federal government, not states. Illinois, Iowa and New Jersey have also proposed taxing prediction markets.
UNC, NC State Getting Their Cut
The revised sports betting rules also call for the University of North Carolina-Chapel Hill and NC State, in addition to FBS programs Appalachian State, Charlotte and East Carolina, to receive up to $5.8 million annually from sports betting tax revenue, WRAL reports.
Under the current structure, UNC and NC State, the state’s largest public colleges, do not see any of that money, as it all goes to the other 13 schools in the system.
The post Gambling Loss Deductions Allowed Under Proposed North Carolina Budget appeared first on Gambling Insider.
