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North Carolina lawmakers on Tuesday morning made public the 2027 state budget plan, which includes distribution of sports gambling revenue to its flagship institutions.
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N.C. State and North Carolina are set to receive payouts beginning in 2027 after previously being left out of the distribution model. The other 13 state-operated universities received tax revenue from sports betting since its legalization in 2024.
The two largest state institutions join Appalachian State, Charlotte and East Carolina in the highest tier of the new distribution model. The schools could receive and up to $5.8 million annually. The yearly amount, however, is variable because it is based on revenue.
The budget, which the General Assembly plans to vote on Wednesday and Thursday before adjourning for the Fourth of July holiday, breaks down the distribution by size and level of competition.
Class I institutions may receive up to 2.2% annually, or up to $400,000, per school. This is limited to public universities in which “the majority of its athletic teams compete in Division I of the National Collegiate Athletic Association.”
Class II institutions may receive 19.5% annually, or up to $2.9 million, per university. Schools in this category compete primarily in NCAA Division I or Division II.
Class III schools may receive 5.7% annually, or up to $2.5 million, per public university if the football team competes in the NCAA’s Football Bowl Subdivision.
The bill states schools can receive funding based on one or more classifications, but distributions per class are equal.
For example, Campbell University can receive up to $3.3 million under Class I and Class II guidelines. That is the same amount the seven largest universities can receive, but Campbell is not eligible for Class III distribution because it competes in the Football Championship Subdivision.
Most of the biennial budget deal, including this distribution change, was reportedly completed over the weekend. The budget, however, won’t be official until the legislature votes. North Carolina is the only state without a comprehensive budget in place after a stalemate between lawmakers. A budget was not finalized in 2025, and the last budget approved came in October 2023.
N.C. State’s proposed 2026-27 athletics budget, as presented to the university board of trustees, was originally balanced using Wolfpack Club donations and university assistance. However, that was based on the expectation N.C. State would not receive any sports wagering tax revenue, according to documents presented to the board’s finance committee. The additional funding would help the university as it strives to continue operating at a surplus.
Athletic director Boo Corrigan told the trustees in February that the athletic department was facing a deficit but felt confident his staff — and its extremely conservative budgeting — would lead to another balanced budget at the end of the fiscal year.
In 2024-25, UNC posted record profits but still finished with a $15 million deficit. The university used reserve funds and surplus from the previous year to cover the shortfall.
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Prior to the budget release, UNC athletics released a statement to the News & Observer about the possibility of the university’s inclusion in the payout model.
“As we await further information about the budget, we are grateful for the General Assembly’s leadership in providing support for our collegiate athletic programs through potential additional sports wagering revenue,” it stated.
The cost of college sports, notably the growing annual revenue sharing limits and so-called athletics arms race, continue to rise at a drastic pace.
Sports betting revenue will only cover a portion of the expenses, but the additional funds will still help the state’s two largest universities. The budget document states funding must be used to support athletic departments and cannot be used to supplement a university’s general fund.
The first $8.4 million of tax revenue from sports betting was distributed, based on the previous model, to offset expenses ($500,000), gambling addiction treatment and education programs ($2 million), youth sports programs ($2 million) and 13 university athletics departments, splitting $3.9 million into $300,000 each.
Under the new budget, $500,000 will be used to offset expenses, $1 million will go toward youth sports program grants. Up to $30 million can be used for the North Carolina Major Events, Games and Attraction fund, which was established to fund and support major sporting events.
The tax rate on sports betting operators will also increase to 23%, up 5% from the current rate, under the upcoming budget. In the last two years, North Carolina has received more than $300 million in taxes on gross wagering revenue.
Some have expressed concern about the tax hike. Beneficiaries of the revenue could see smaller distributions or a rise in illegal activities if bettors are priced out.
Operators have warned beneficiaries of gambling revenue could lose out if taxes are raised and bettors turn elsewhere, even to illegal options, if it becomes more expensive to bet legally in North Carolina.
Lawmakers also plan a new tax on prediction markets, which is a platform “which a consumer can buy, sell or exchange event contracts.” Event contracts, according to the Commodity Futures Trading Commission, are simply financial contracts based on potential “event” scenarios. Kalshi and Polymarket are among the largest prediction markets in the United States.
The new budget also allows for income tax deductions on gambling losses.
The budget release comes one day after Edward Davis, a former North Carolina and NBA player, was one of six people indicted on federal charges related to illegal betting, sports bribery and fraud. In the past year, a former North Carolina A&T men’s basketball player was involved with a gambling investigation, while four North Carolina men were part of a separate college basketball sports betting investigation.
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