The Slippery Slope of Legalizing Sports Betting in North Carolina

By Mike Garrigan

By amending its gambling laws this past summer, North Carolina may have invited an uncontemplated inevitability. On July 26, 2019, North Carolina Governor Roy Cooper signed Senate Bill 154 into law.[1] The new law allows “sports and horse race wagering” on Native American tribal lands under the federal Indian Gaming Regulatory Act.[2] Senate Bill 154 aimed to amend N.C.G.S. § 14-292.2 so that “sports and horse race wagering” would be included on the list of games that could be legally conducted in casinos located on tribal lands within North Carolina.[3] Under the new law, sports betting must occur on tribal lands and is limited to betting on the outcomes of sporting events.[4]

North Carolina became the tenth (10th) state to legalize sports betting, albeit limitedly.[5] In the wake of the Supreme Court’s striking down of the Professional and Amateur Sports Protection Act (“PAPSA”) in 2018,[6] many states have authorized sports gambling using a “walk-jog-run” approach.[7] This method slowly introduces sports betting into the population. The “walk” stage allows gambling in only brick-and-mortar locations, like tribal land casinos. The “jog” period permits “proposition” betting on aspects of sporting other than the outcome of games. The “run” phase authorizes mobile betting. Proponents of the North Carolina law estimated that a brick-and-mortar sports betting approach could generate as much as $1.5 million in revenue for the state.

But in actuality, to enjoy over $1 million in tax revenue from sports betting, North Carolina will have to legalize mobile sports gambling. Brick-and-mortar sports betting is small potatoes. Eastern Band Cherokee Indian Chief, Richard Sneed, reported that most casinos only receive, at best, 5% of their revenue from sports gambling.[8] Most states that authorize only brick-and-mortar sports betting have received lower than expected tax revenue. New Jersey recently met its projected tax revenue of $1.8 million because, and only because, it has legalized mobile betting.[9]

If mobile betting is legalized in North Carolina, it will not be without controversy. As Justice Alito opined, “Americans have never been one mind about gambling.”[10] Any tax revenue must be balanced against the possibility that “legalizing sports gambling will hook the young on gambling, encourage people of modest means to squander their savings and earnings, and corrupt professional and college sports.”[11]

In recent months, with the future of sports betting in the South largely unknown, entrepreneurs and politicians have responded in curious and conflicting ways.  Before the North Carolina bill passed, billionaire David Tepper purchased the Carolina Panthers recognizing that if sports betting became legal in either North Carolina or South Carolina, the team would likely benefit financially.[12] Senators Lindsey Graham (R-SC), Richard Burr (R-NC), and Thom Tillis (R-NC) co-sponsored Bill S.790, a proposed law that would establish a casino on the Catawba Indian reservation.[13] The Catawba Indian Nation casino would likely straddle the border between NC and SC and be just a 30-minute drive from Panthers Stadium.[14] Both Chief Sneed and Tepper expressed concern over Graham’s bill, but for different reasons. Sneed recognizes that someone wanting to gamble legally would be less inclined to drive to the Cherokee casino nestled in the Appalachian Mountains than to a Catawba casino not far from Charlotte.[15] Tepper, on the other hand, fears that a Catawba casino offering legal gambling 30 minutes away from Panther Stadium would reduce game attendance.[16]

If what’s past is prologue, then it is simply a matter of time before mobile sports betting becomes legal throughout the South.  While sports betting bills have failed in the South Carolina legislature on account of being “inconsistent with the core beliefs” of South Carolinians,[17] the histories of the Powerball and Mega Millions lotteries have shown that when one state legalizes a form of gambling, other states are soon to follow. Citizens from non-sports betting states will likely just travel to the nearest sports betting state to gamble and deprive the non-sports betting states of revenue. And, with the revenue raising efficacy of brick-and-mortar betting in doubt, North Carolina will likely progress through the “walk-jog-run” cycle and inevitably allow mobile betting.