North Carolina Sports-Betting Legislation Goes South

June 23, 2022
Mobile sports-betting legislation in North Carolina went from the fast track toward passage to all but dead Wednesday following an unfavorable vote on one of the two proposed bills.


Mobile sports-betting legislation in North Carolina went from the fast track toward passage to all but dead Wednesday (June 22) following an unfavorable vote on one of the two proposed bills.

By a 50-51 vote, the House narrowly rejected Senate Bill 688, the underlying bill that would legalize mobile sports betting, which had been approved by the Senate last August.

Both Senate Bill 688 and Senate Bill 38, which passed the House Judiciary 1 Committee on Tuesday, successfully cleared the House’s Finance and Rules Committees in separate hearings Wednesday, leading to a floor vote on each bill Wednesday evening.

But throughout almost two hours of combined debate on both bills, the effort began to unravel, as significant opposition became clear, and the measures started to see significant changes.

As a result of agreements with Senate leaders and representatives of Democratic Governor Roy Cooper, the bill’s supporters opted to push Senate Bill 688 untouched from the form in which it passed the Senate last August, while simultaneously passing a separate bill, Senate Bill 38, which would effectively amend the original legislation.

The changes included raising the tax rate from 8 percent to 14 percent of gross revenues and including a sunset clause that would cap promotional play deductions after 2024 and then phase them out after three years.

Critics of the bill said that the reason for the convoluted structure was a lack of confidence that the original bill would clear the Senate if changes were made.

“We all know that open secret,” said Representative Pricey Harrison, a Democrat. “So we’ve got this problematic bill that doesn’t have solid support in either chamber or either party.”

That lack of support became clearer on Wednesday evening when the House approved an amendment to Senate Bill 38 over the objections of sponsor Republican Representative Jason Saine that would prohibit betting on all college sports, a major blow in a southern state such as North Carolina which is a hotbed for college basketball and where college football is effectively a major sport.

The House approved Senate Bill 38 by a 51-50 vote, but the bill would still require a final affirmative vote the next day, with more amendments promised to be proposed, including a ban on deposits using credit cards.

However, that discussion may have been rendered moot by what followed, which was the 51-50 vote against the underlying bill.

Several lawmakers expressed moral concerns over legalizing further gambling in the state, with one going as far as to equate the argument that regulating and taxing betting would be preferable to black market offerings to a strawman’s argument for regulating human trafficking.

“If we're going to accept gambling, so that we can get tax money out of it … what other evils will we approve, so we can tax those?” said Representative Larry Pittman, a Republican. “It may be a little far fetched, but I don't think so, that we have a lot of human trafficking in North Carolina.”

“Wow, there's so much of that if we made that legal and taxed it, boy, we'd get a lot of money,” he continued. “I want nothing to do with dirty money.”

Although other arguments were less incendiary, they still showed a clear divide over the bill’s prospects, culminating in its 50-51 defeat.

A subsequent effort to send the bill back to the House Rules Committee to make changes and bring it back to the floor also failed, leaving the bill in grave danger.

Saine told Raleigh television station WRAL after the vote that the effort was “not totally dead” but reviving it before the June 30 end of the legislative session will require a major effort.

Given that Senate Bill 38 as written requires Senate Bill 688 to be enacted as well, it remains unclear as to whether that bill will be further considered despite its preliminary approval Wednesday.

North Carolina had been a state that many industry sources were optimistic about following the Senate passage last summer, but the challenges demonstrate that four years following the overturning of the Professional and Amateur Sports Protection Act (PASPA), there are no more layups in the U.S. sports-betting legislation landscape.

“Every state that hasn’t already passed mobile sports betting is going to be really HARD to pass and likely require concessions (some major),” Jeremy Kudon, a lobbyist for the Orrick firm which represents several major sports-betting brands including DraftKings, FanDuel and BetMGM, wrote on Twitter on Wednesday.

“And it may take a few tries to get the ball over the goal line,” Kudon continued. “Just like not every superstar gets into the hall of fame in Year 1 or even Year 4, some issues just require more work and education in certain states before they become law.”

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