North Carolina Governor Roy Cooper Endorses Tax Write-offs for Gambling Losses
North Carolina Governor Roy Cooper, a Democrat, supports changing the state's tax code to let people who itemize their taxes deduct certain gambling losses.
Cooper discussed a report from North Carolina State University recently, which pointed out that the state's new online sports betting scene might result in unexpected tax issues. Professors Nathan Goldman and Christina Lewellen from the Poole College of Management at NC State explained that losses from gambling aren't currently tax-deductible under the state's rules.
North Carolina regards sports gambling earnings as income, which is subject to a 4.5% state tax rate for all individuals. Although sports betting and other gambling earnings are also taxed by the federal government, the IRS allows gamblers to subtract their losses up to the value of their winnings. This isn't applicable in North Carolina, and Cooper believes this needs to be changed.
The Governor tweeted, "When it comes to sports wagering, it's not fair to have to pay taxes on your winnings without being able to deduct your losses. Legislators should fix this."
In March, North Carolina started its online sports betting, with eight licensed operators running: FanDuel, DraftKings, BetMGM, Caesars Sportsbook, ESPN Bet, Fanatics, bet365, and Underdog Sports.
Gambling Losses
Cooper thinks North Carolinians who bet on sports should be able to subtract some of their losses when assessing their winnings. As long as the current state tax rules are in effect, an individual who wins $1,000 and then risks their winnings in another bet and loses would still need to pay a $45 tax to the state on the original $1,000 win.
The IRS system allows bettors to deduct their losses against their winnings, meaning they wouldn't need to pay tax on their betting activities. Goldman and Lewellen note that many bettors in North Carolina could have to declare gambling-related tax liabilities when they file their state tax returns for 2024, even without reporting net winnings.
The professors note that keeping track of an online sports betting account's betting history is much more precise than keeping tabs on cash wagering at a casino. This makes it simpler for both the state's tax authorities and individual bettors to understand their gambling tax burden. "The level of sophistication of sports betting tracking differs substantially from taxpayers gambling in casinos in that every single wager, whether big or small, is meticulously documented and organized," they wrote.
Possible Shift in Betting Rules
North Carolina's sports betting landscape may change slightly, with a potential ban on individual player prop bets involving college athletes. The NCAA argues that bets involving college athletes' performances lead to harassment on college campuses and disrupt the integrity of college sports.
Legislator Marcia Morey (D-Durham) intends to propose legislation barring sportsbooks from offering these bets soon. However, main sponsor of North Carolina's sports betting law, Rep. Jason Saine (R-Lincoln), doesn't believe this will significantly curb the NCAA's alleged issue.
Saine remarked, "This sort of behavior would still occur with fanatics. Just follow the rules of society. You don't harass anybody, or you shouldn't be." He added, "I don't think we need a new set of regulations."
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Source: www.casino.org
