A bipartisan sports-wagering N.C. Senate bill has been placed in a parallel House committee gauntlet that is likely to carry over into the 2022 legislative session.
Senate Bill 688 would allow North Carolinians to place a bet on professional and collegiate sports with a select group of wagering operators.
The bill was approved on third reading by a 26-19 vote Aug. 19.
On Wednesday, the bill was placed in the House Commerce committee as the first step. The remaining committee steps would be Judiciary 1, Finance, and Rules and Operations.
SB688 was introduced in the Senate by April 7 with Sens. Paul Lowe, D-Forsyth, and Jim Perry, R-Lenoir, as co-primary sponsors.
Lowe and Perry have emphasized SB668 could play a pivotal role for the state’s three highest-level professional teams in terms of additional revenue to compete with rivals who reside in states that have approved the forms of gambling permitted in SB688.
After being shelved for nearly four months, SB688 was fast-tracked through the Senate version of those four committees from Aug. 3 through Aug. 10.
Political analysts project the bill will face stiffer opposition from House members, including some in the Triad, who are not in favor of expanding North Carolinians’ access to legalized gambling.
“It’s uncommon for most bills to have to clear more than one substantive committee,” said Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation.
“The fact that the sports gambling bill would have to clear multiple hurdles in the House means that chamber isn’t willing simply to rubber-stamp the Senate’s plan.”
Kokai said requiring the four committee steps “doesn’t necessarily mean that House leaders oppose the measure.”
“It’s a stronger sign that members of the House Republican caucus have lingering questions. Setting up a lengthy committee schedule will give them time to get answers.”
The bill’s passage was noteworthy in part because it represents a break in voting policies by Senate leader Phil Berger, R-Rockingham, according to Raleigh TV station WRAL.
Berger tends to not allow floor votes on bills that lack support from the majority of GOP senators, which is 28 for the 2021 session.
In the third reading vote, 15 Republicans voted no, along with four Democrats. Berger was one of nine Republican senators to vote yes. The third vote split Forsyth’s two senators, with Lowe voting yes and Republican Joyce Krawiec voting no.
During the committee steps, some Senate members and members of the public questioned the potential socioeconomic effects, such as perpetuating gambling addiction, of allowing the proposed level of sports wagering.
Perry said during the Senate floor debate that “prohibition doesn’t work. We know the activity takes place today whether we like it or not.”
“We can’t ignore that fact. It’s just not something regulated and taxed by the state.”
For example, Sen. Kirk deViere, D-Cumberland, questioned during a committee meeting whether the bill is necessary as an industry retention tool, in particular for the Carolina Panthers, Charlotte Hornets and Carolina Hurricanes.
Other states and communities are allowing on-site betting at their sports facilities as an additional revenue stream.
Perry said that “if the universe of competition for these sporting teams is all 50 states ... not having the ability to earn income from this would by definition put them at a competitive disadvantage as compared with teams in other states.”
Perry said his discussions, including at the legislature, with officials of professional sports teams have addressed those concerns.
“They told us ‘they didn’t need a restrictor plate put on them by a restrictive state government to (keep) them to compete freely with the other organizations,’” Perry said.
Rep. Donny Lambeth, R-Forsyth, said when SB688 cleared the Senate that the bill “will be looked at very closely by the House.”
“It is too early to tell, but I don’t believe the House will move on it very quickly, especially with the large number of bills from the House that are still being held in the Senate.”
At that time, Reps. Pricey Harrison, D-Guilford, and Lee Zachary, R-Yadkin, were less confident in SB668 gaining House approval.
“There is a healthy bipartisan group of House members who are opposed to gambling, including me,” Harrison said.
“I don’t see how the bill moves through the House this year. It’s a big change for North Carolina, and it needs thorough vetting and deliberation.”
Zachary said he is leaning toward opposing the bill, primarily because there are other gambling options in the state.
“There’s a Catawba Indian casino in our future. Rumor has it that it will be close to the North Carolina-South Carolina line where it intersects with I-85,” Zachary said.
“There’s plenty of gambling opportunities through the N.C. Lottery. Practically all the folks I talk with feel we just don’t need any more gambling.”
Kokai said that House leaders could use a fast-track committee process as well, “especially if this bill ends up becoming some sort of bargaining chip during the session’s closing days.”
“Setting up the bill’s pathway in this way gives House leaders plenty of options about how to proceed.”
The odds are low that the state House will address SB688 in the current session, said John Dinan, a Wake Forest University political science professor who is a national expert on state legislatures.
“There is just so much else on the legislature’s agenda for the rest of 2021, namely the budget and redistricting, that it is much more likely that the sports betting bill would be considered next year.”
“Even then there is no guarantee that it will pass next year, given that it faces some significant opposition.”
Sports wagering could bring in a potential $25 million to $50 million in additional funds for school construction, according to Lowe and Perry.
The bill would allow for betting on professional, college, electronic/virtual and certain amateur sports.
However, wagering on youth club and school sports would be prohibited, as well as on injuries, penalties, the outcomes of disciplinary proceedings against an individual, and the outcome of replay reviews. Also prohibited is placing a bet for another person.
SB688 does not affect wagering in fantasy sports leagues, which are based on the accumulation of statistics by athletes and players, or pari-mutuel wagering on horse racing.
Lowe and Perry estimated that between $48 million and $50 million in annual tax revenue could be generated by authorizing and regulating sports wagering. There also would be licensing fees.
SB688 would expand the authority of the N.C. Education Lottery Commission to oversee sports wagering, with just 10 to 12 sports wagering operators allowed to accept bets.
The commission would collect an 8% tax on the monthly adjusted gross revenue of the licensed gambling groups. Half of that revenue would be diverted to the N.C. Major Events, Games and Attractions Fund.
Each wagering operator would be required to be licensed, pay a $500,000 licensing fee and submit to a credit-history, tax-record and criminal background checks. The license would be good for up to five years.
There would be renewal fees of $100,000 for interactive sports wagering licenses, $10,000 for a service provider license, and $5,000 for a sports wagering supplier license.
“It’s not an undertaking for the faint of heart,” Perry said. “It does require a great deal of money in this space.”
Lowe said during Wednesday’s floor debate that views SB688 as “a revenue bill.”
“If we can get more resources for our state, then maybe there is the possibility that more towns can do better by education.”