Cooper wants legislature to ‘fix’ tax issue with mobile sports betting

RALEIGH, N.C. (WNCN) – Gov. Roy Cooper (D) wants the General Assembly to address an issue that could cause people betting on sports to owe taxes even if they ultimately lose.

The governor posted about it in response to an article by Nathan Goldman, a CPA and accounting professor at North Carolina State University, and Christina Lewellen, who is also an associate professor of accounting at NC State.

“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,” Cooper posted on X.

Goldman noted that the state does not allow people to deduct their losses from their gambling winnings for tax purposes, meaning people who break even or lose money could still owe taxes.

He used this example. A person places a bet and wins $9,000. Then, they gamble with that $9,000 and lose all of it. Even though they didn’t end up making any money, the state still taxes the $9,000 they initially won as income. That person would owe $405 in state income taxes.

“The state actually has the power to address this immediately,” Goldman said. “Most notably, what would really help, is it would eliminate these tax surprises. And, it would really help connect the North Carolina tax system with what many people perceive to be a just tax system.”

Goldman explained if you win at least $600, a sports betting company will generate a W-2G form for you next winter, which will be reported to the IRS.

While you’ll owe federal income tax as well, the federal government does allow people to deduct gambling losses. However, that’s only possible if you itemize your deductions. Goldman pointed out most people don’t do that because the 2017 tax law passed under former President Donald Trump significantly increased the standard deduction.

In 2024, the standard deduction for a single filer is $14,600. It’s $29,200 if married and filing jointly.

“It’s really important that taxpayers understand what they’re getting into when they gamble, that this is going to be income,” Goldman said. “These apps track every single bet that you make. They track every single winner. They track every single loser. They know exactly where you made that bet too, whether you’re in North Carolina or Virginia or New York. And, they’re keeping very careful track of your gambling activity.”

CBS 17 contacted Rep. Jason Saine (R-Lincoln), one of the leading proponents of the sports betting legislation and a top budget writer in the House, but did not hear back.

Sports betting went live on Mar. 11 in North Carolina. From that date to Mar. 31, the North Carolina Education Lottery says people wagered about $659.3 million. That includes both the money people put in as well as promotional bets offered by the sports betting operators. Players won $590.8 million, leaving $66.5 million in gross wagering revenue.

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