Anyone being honest about the prospects of the major expansion of gambling that online North Carolina sports betting represented knew that it was going to be a tough sell.
Arguments can be made that the narrow defeat of online sports betting during a protracted House of Representatives session on June 22 was the product of political miscalculations; or an awkward two-bill approach to work it through the House; or painfully slow bill-writing that delayed getting it before necessary committees; or a lack of political courage that trumped common sense; or utter ignorance of the realities of gambling in 21st century America.
The truth is that the fall of sports wagering in North Carolina in 2022 as the spring session moves toward its close (the “official” end was June 30 but work could seep into the weekend) can be attributed to all of the above.
The legislature will come back this year for six days spaced over several months to wrap up work on bills, but it’s unclear if online sports betting would be on the agenda for the sessions. Fans and the gambling industry will have to hold out hope that North Carolina betting apps will be able to accept sports wagers from 2023 onwards.
The delicate nature of the G-word in the Tarheel State — that’s “G” as in gambling — was consistently apparent as Sen. Jim Perry painstakingly marched what was SB 688, an online sports wagering bill he co-sponsored, through a gauntlet of Senate committees in 2021.
Perry, a Republican, would gently ease into the topic with homespun Southern charm by admitting that even his own mother would rebuke him for championing the internet gambling bill.
So, yes, he assured colleagues he was acutely aware that sports betting was not public policy that sits comfortably with many North Carolinians with traditional social value outlooks.
But Perry’s approach was to press on with the realities of online sports gambling.
He pointed out that the very nature of the internet meant that state residents could easily go online, find black market operators and wager with them.
Let’s call them Bookies Without Borders. Offshore gambling operators were already taking bets from Henderson to Wilmington, from Nags Head to Asheville, and from every Carolina city and town in between.
It was time — Perry and his ally in the House, Rep. Jason Saine, also a Republican, would argue — that sports betting in the state be legalized, regulated and taxed, the way it was in 30-plus other jurisdictions, including two neighboring states, Virginia and Tennessee. (South Carolina is unlikely to beat North Carolina to legal mobile sports betting).
It’s a compelling argument. And it makes sense.
So, what went wrong?
Online Sports Betting Had Bipartisan Support
First, here’s what was right about the effort that eventually failed.
Sports gambling in North Carolina is not necessarily a strictly partisan issue. Republican proponents made sure to enlist bi-partisan support. The co-sponsor of the original SB 688 was a Democrat, Paul Lowe Jr.
Like Perry, Lowe addressed the online sports gambling issue with mention of the financial gain to the state and to the communities he represented.
So, online sports gambling never shaped up as a Red-Blue battle at its core.
Also, the protracted process of moving the bill through the two chambers — the Senate passed the bill in November 2021 and the House’s full vote didn’t come until seven months later, which allowed those members who faced elections to avoid having to explain their own votes on the issue — was quintessentially Southern.
The deliberate pace allowed legislators to mull and speak their minds so they weren’t made to feel that they were being bulldozed and their opinions didn’t count.
Proponents hoped that this genteel persuasion would win over enough lawmakers.
Why the Online Sports Betting Effort Failed
And now, what went wrong with the online sports gambling push.
It should be noted that the “what” doesn’t necessarily imply that there there’s finger-pointing at individuals. And admittedly, some of the “what” is more clearly seen in a rear-view mirror.
But here goes.
The bill that passed the Senate in November was introduced in April 2021. In the timeline of online sports wagering in America, that was another era and the specifics of the original bill represented — in truth — another era, even though it was just a little over a year ago. A whole lot has changed since then and the bill that reached the House was utterly unpassable as it arrived.
Because of that, and knowing the bill would have to be altered, proponents developed a strategic double-barrel approach by pairing the original bill with a so-called “trailing” bill that would include the real nuts-and-bolts of how online sports gambling would look.
For instance, in the original bill that passed by the state Senate the tax rate on bookmakers was 8%.
That number seemed reasonable at the time but looked outrageously puny in short order, especially after New York levied a 51% rate when it launched online sports gambling in January 2022 with gambling operators falling all over themselves to enter that market.
Other Issues Became Apparent
As time passed and the nascent online sports gambling operations in other states evolved, other issues emerged, such as whether operators should be allowed to deduct promotional expenses to lessen their tax obligations.
It should have been obvious that, by allowing such deductions, original projections for how much money the state could expect to realize (in North Carolina’s case the projection approached the mid-$20 million range in a full year of operation) could be way off base.
Then there was the issue of whether betting on college sports would be allowed.
The bill that passed the state Senate allowed for such wagering. In the House, an objection to college betting was met with an immediate white flag, a stunning turn considering the betting interest in the state’s college sports teams.
In another late development, progressives in the House were looking for funding for sports programs at the state's Historically Black Colleges and Universities. That moment was evidence that “funding” — meaning how the tax money from online sports betting would be allocated — clearly wasn’t fully explored so that enough legislators would be on board at the final vote.
So on one hand, legislators wanted to prohibit wagering on colleges, but on the other hand, they wanted money from sports betting to go to college athletic departments.
Try to figure that one out.
Time Ran Out on Online Sports Betting
After an excruciatingly long wait for the trailing bill to come from the desk of the bill writer and as the calendar was running on the spring session’s supposed drop-dead date of June 30, the bill the House was being asked to approve at the 11th hour was shape shifting before House members’ eyes.
In a voting sequence that can only be described as mystifying, SB 38, which contained the changes that were required to appease some legislators did pass narrowly — but the underlying bill, SB 688, failed by a 51-50 vote.
Faced with a fourth-and-long, proponents talked about keeping hopes alive in the session’s waning days but finally, the clock simply appeared to run out for online sports gambling in North Carolina.
And that’s a shame.