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North Carolina legislators gambling on the future of sports betting
Lawmakers look to follow Virginia's lead
 
Published Wednesday, June 2, 2021 9:20 am
by Macy Meyer | UNC Media Hub

PHOTO | UNC MEDIA HUB
North Carolina lawmakers are exploring and debating whether to make sports betting legal.

Jake Barnhart couldn’t wait for the 2021 Super Bowl.


It wasn’t because he was a life-long fan of the Kansas City Chiefs or the Tampa Bay Buccaneers, and it wasn’t because he was just excited to see two of the best NFL teams compete for the most-coveted trophy in pro football.


He was excited because sports betting was finally legal in Virginia.


In January, Virginia lawmakers made sports betting legal after a U.S. Supreme Court decision struck down the Professional and Amateur Sports Protection Act in 2018, allowing each state to decide for itself whether to make betting legal.


Barnhart, from Waterford, Va., downloaded FanDuel, a popular American gambling site that offers sportsbooks and online betting, and noticed the platform was offering a promotion for the Super Bowl with +5500 odds – “crazy” good chances Barnhart thought. He bet $5 that the Buccaneers would win. When Tampa won, he walked away with $280.


“I just can’t wait for next football season,” he said.


Unlike in Virginia, sports betting is illegal in North Carolina except on the Eastern Band of Cherokee Indians’ tribal land in Cherokee and Murphy. But now, politicians across the state are realizing the money-making potential of legalizing betting to stimulate the N.C. economy and to help fund education.


Sens. Jim Perry (R-Lenoir) and Paul Lowe (D-Forsyth) met for dinner as they often do to discuss politics. The topic of conversation? How as North Carolinians, they need to follow the state motto and begin to face the realities.


Esse quam videri. To be rather than to seem.


Perry and Lowe discussed the reality of trying to raise revenue for their respective communities without raising taxes on their constituents. The conversation led to the revenue N.C. could make from taxes on gambling.


“Sometimes it feels like we don’t really face the realities that are in front of us,” Perry said. “We discussed the fact that if you don’t have legal sports wagering in your state, it doesn’t mean that you don’t have sports wagering. It just means that you have illegal sports wagering. It’s sort of like ignoring the drunk uncle and locking him in the basement, instead of acknowledging where we are and what exists.”


Those conversations turned into action when Perry and Lowe filed a new bill, “SB 688: Sports Wagering,” on April 7 that would legalize sports betting statewide and allow “any sports governing body on whose sporting events sports wagering is authorized” to partner with a sports betting operator.  The 17-page bill details who can bet, sporting events that can be bet on, how to run a gambling operation and even ways to prevent compulsive or degenerate gambling.


The main goal of the bill? Revenue.


The two counties Perry represents, Wayne and Lenoir, are in the bottom 40 percent of N.C. counties in terms of wealth. Of the 100 counties in the state, Wayne is ranked 58th and Lenoir is ranked 71st in per capita income. The reality, Perry said, is that sports betting is already happening, so bringing it into the sunlight will offer a viable way to raise money via taxes.


“We’re just trying to find new creative pathways to provide for needs that we see,” Perry said.


North Carolina is currently not regulating sports betting. Instead, sports gamblers bet through underground networks of sportsbooks and those who don’t want to deal with the dangers of illegal sports betting head to other states to place bets.


“We need to keep that money in this state,” Lowe said.


A report from Spectrum Gaming, a non-partisan consultancy specializing in legalized gaming, projected that “illegal gaming could be a nearly $2 billion industry in North Carolina,” which would deprive the state of $538 million in state gaming taxes. In short, North Carolinians are already betting millions of dollars every year on sports, whether underground or in other states.


Lowe and Perry see those projections as a missed opportunity for enhancing education in the state, and a missed opportunity for expanding the revenue raised by the state lottery. According to the North Carolina Education Lottery, $3 billion in lottery sales were conducted in fiscal year 2020, with $729 million raised for education programs. Adding sports betting could mean billions more for the state.

“One of the other things is when we started looking at the needs of education in the state, this pandemic is certainly pulling back the covers on all of the needs of so many of them,” Lowe said. “We need to begin to look at ways that we could possibly raise revenue so that we can deal with school construction and some of these other things that are so crucial to our communities.”


Lowe said the bill is an extension of the NCEL – a connection that might make the legalization process more achievable, considering millions participate in the lottery every year.


“Because the lottery gives money, millions and millions of dollars, so little kids can go to school, we’re all on board with that,” Preston Lennon, an advocate of sports betting, said. “No one sees the lottery as this great evil, but it’s the same thing.”


Lennon, a former UNC student, said sports betting is popular among UNC-Chapel Hill students. From live bets between friends during a game to betting with a bookie, UNC students are in the privileged position of attending one of the most successful athletic institutions in the world – and being familiar with those athletic teams for betting purposes.


“Just the options are limitless,” Lennon said. “At UNC, it’s really just seasonal. When it’s football season, everyone is hell-bent on betting football, then college basketball season will kick in and bet on ACC basketball.”


UNC athletics would undoubtedly be a focus for sports bettors in the state. In fact, the first legal sports bet placed in North Carolina at Harrah’s Cherokee Casino was for UNC to beat Wisconsin in the NCAA men’s basketball tournament. UNC lost.


But many involved with the UNC System are staunchly opposed to legalizing betting on collegiate sports.


“We do not support wagering on amateur athletics, but know that it is legal in a number of states,” said UNC athletic director Bubba Cunningham in a statement to The News and Observer in 2019. “We are working with our conference office and will be working with the NCAA on this issue.”


Last month, some members of the UNC Board of Governors expressed concern about the nomination of Malcolm Turner to the UNC-Chapel Hill Board of Trustees. Turner is the head of strategy and corporate development for DraftKings, an online fantasy sports company that promotes sports betting.


“The fact of the matter is that DraftKings is promoting sports betting on college sports, and I just do not think that’s appropriate,” said Art Pope, a Board of Governors member, and prominent Republican businessman and politician. “It’s in the best interest … to keep an absolute arms-length distance between online gambling in college sports and our college sports.”


Despite the opposition, Turner was appointed to the Board of Trustees.


If sports betting is legalized, North Carolina is projected to be the fourth most lucrative market, trailing New York, Pennsylvania and Illinois. UNC, and the athletic prowess of many N.C. universities, would help make the state a hotbed for sports betting.


Spectrum Gaming projected that within five years, North Carolina could generate $367 million from sports betting, $300 million from online gambling, and $2.2 billion from casinos.
Matt Roob, who led the team that wrote the report, said the projections were calculated based on statistics and trends from other states along with factors such as population, resident income levels and gaming offered in the neighboring states.


“We didn’t just use a Magic 8 Ball and a dartboard,” Roob said. “We actually looked at the statistics and the data and said, ‘OK, well, let’s adjust North Carolina’s household income, let’s adjust for North Carolina’s number of teams, let’s adjust for everything except the temperature-humidity index,’ and then based on the information that’s out there from these other states, we’ll come up with a number.”


Roob said that the number of sports teams in the state helps, too. From the opportunities offered through professional sports — from the Carolina Hurricanes to the Carolina Panthers and the Charlotte Hornets — and ACC sports, sportsbooks could attract immediate interest.


“You got Duke, UNC, you’ve got pro teams,” Roob said. “Those figures are not terribly surprising given the population, the income and the interest in sports, I mean, fanatical interest in sports.”


Opening in time for March Madness, Harrah’s Cherokee Casinos in Cherokee and Murphy have recorded impressive numbers.


“The response has been tremendous,” Principal Chief Richard Sneed said. “It’s been better than we had anticipated. Our players come from, if you stick a pin in the map and go out 200 miles in any direction, we have players coming from all directions, so a lot of people were really excited about it.”


Despite the immediate impact of sports betting for the casinos, sports is a smaller revenue stream than other amenities such as table games or slots, Sneed said. Sports betting attracts a different kind of gambler who studies stats, performances and sports data.


“If I could draw an analogy, it’s kind of like, somebody who’s a Star Wars nerd and knows everything about Star Wars,” Sneed said. “Many of your sports bettors are like that; they know their team inside and out. They know the stats and so it’s just a different kind of player.”


Perry said that only 20 percent of the bills filed actually go on to become law, and he said there is disagreement across party lines on the ethics of legalized betting.

“There are emotional arguments on all sides of this,” Perry said. “You’ve got the strict conservative view that this is going to lead to more addiction problems, hurt families. You got more of the libertarian view that says it’s my choice, it’s my money. But what we’ve seen throughout history in North Carolina, is that there tends to be more leniency on issues when it comes to funding schools.”


This story corrects the amount of money generated from lottery sales in fiscal year 2020.

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