Study Makes Recommendations For North Carolina Sports Betting

Posted on August 6, 2020 - Last Updated on October 27, 2020

If North Carolina follows the recommendations of Spectrum Gaming Group, mobile North Carolina sports betting would look much like its neighbors in Tennessee.

Spectrum’s gaming market analysis suggests that North Carolina should offer sports betting operated by the state lottery through both lottery retailers and online channels.

The legislature ordered the study last August to analyze potential new gaming activities in North Carolina, calling specifically for an examination of sports betting. The North Carolina Education Lottery (NCEL) contracted with Spectrum to conduct the study.

The findings were due to the Joint Legislative Oversight Committee on April 15. The meeting was canceled as a result of the coronavirus pandemic and has not been rescheduled. However, the committee released the study at the request of PlayTenn.

Why the lottery to run NC sports betting?

It’s rarely optimal to have a single operator in any sector, as competition usually creates better outcomes for consumers. In DC, having only one option for online wagering created an uncompetitive market and a difficult sign-up process.

Lotteries also have mixed results in overseeing sports betting. In Tennessee, legislators considered changing the regulatory body after the Tennessee Lottery produced regulations that included the unprecedented step of capping payouts at 90%.

But in small states with no other commercial gaming, having the lottery handle sports betting can be better than reinventing the wheel.

Spectrum stated that NCEL “is in the most advantageous position to create a sustainable sports betting model that not only will maximize revenue for North Carolina, but also allow for responsible growth of a sports betting product.”

The report provided four reasons:

  1. It’s the current operator of a successful lottery operation and has extensive marketing and operation experience in the state.
  2. It has experience developing an extensive retail chain, along with managing gaming technology providers in both the retail and digital spaces.
  3. It has experience operating gambling responsibly by supporting efforts to minimize problem gambling.
  4. By authorizing sports betting through its retail chain, NCEL could grow traditional lottery revenue.

Expanded gambling could mean big money for NC

In addition to sports betting, the study looks into the potential of adding many other gambling activities to the state. Here’s a look at the five-year forecast provided by Spectrum for new forms of gaming in North Carolina. The totals are gross gaming revenues (GGR) in the millions.

Form of GamingYear 1Year 2Year 3Year 4Year 5
Commercial casino$1,615m$1,831m$2,154m$2,208m$2,240m
Internet casino$124m$150m$198m$247m$301m
Sports betting$113m$214m$349m$358m$367m
Horse racing$5m$11m$14m$15m$15m
Internet lottery$24m$61m$99m$118m$146m

The highest grossing potential is for adding video gaming terminals at bars, taverns and fraternal organizations.

Spectrum’s sports betting projection is if the NCEL offers wagering online and via 5,000 self-service betting terminals at authorized lottery retailers, including bars and restaurants. If North Carolina opted for a digital-only rollout, as is being done in Tennessee, Spectrum believes it would generate slightly more than 80% of the GGR potential.

The forecast assumes that either Virginia or South Carolina offers sports betting before North Carolina. If North Carolina offers sports betting first, Spectrum gives the market a first-mover advantage. The study projects an additional $150 million over the first three years.

Study recommendations for North Carolina sports betting

The following are key recommendations from the study on how the NCEL should conduct sports betting:

  • Adopt a no-risk model in which the company contracted to provide the platform and perform all services bears the risk.
  • Allow betting on in-state college teams. With 18 NCAA Division I colleges and universities, including four in the ACC, the state would forsake significant revenue if it prohibited such games.
  • Offer a full range of bet types and the widest possible range of permitted sports.
  • Consider including esports.

Spectrum recommended that North Carolina stick with the NCEL to regulate expanded gambling in the state. The legislature considered a bill last year to add a gaming commission.

The report stated that the lottery “is in the most advantageous position to create a sustainable sports betting model that not only will maximize revenue for North Carolina but also allow for responsible growth of a sports betting product.”

Spectrum suggests 10% to 12% hold target

When Tennessee set up a hold mandate of 10% in April, there were concerns that it would result in Tennessee operators not being able to offer odds competitive with neighboring states or the black market.

Spectrum recommends that North Carolina targets, but not mandates, a hold of 10% to 12%. There’s a big difference in targeting and requiring. It’s a lesson the Tar Heel State could learn from its neighbors to the west.

Delaware (13.9%) and Mississippi (10.8%) are the only states with a hold higher than 10%. However, those states limit their sports betting to retail only.

Spectrum adds that the NCEL should be prepared to adjust its payout percentage over time. That way it would ensure that it remains competitive at an appropriate level.

Mobile sports betting’s effect on tribal casinos

North Carolina legalized sports betting in 2019 for its two tribal casinos on the land of the Eastern Band of Cherokee IndiansHarrah’s Cherokee Casino and Harrah’s Cherokee Valley River Casino. After delays in approving new compact language to authorize sports betting, the casinos have yet to open their sportsbooks.

The Cherokee casinos are less than half the distance from Knoxville as they are from Charlotte. With the majority of Cherokee casino business coming from out of state, Spectrum believes that adding sports betting online and through lottery retailers won’t negatively affect wagering at tribal casinos.

According to the report:

“Spectrum concurs with the ECBI and Caesars that, although a sports-betting monopoly in North Carolina would of course be ideal for the Cherokee casinos, the presence of attractive, entertainment-oriented sportsbooks combined with the already high patron volumes at those casinos will generate positive financial and economic results at those two properties.”

Matthew Kredell Avatar
Written by
Matthew Kredell

Matthew has covered efforts to legalize and regulate online gambling since 2007. His reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. A USC journalism alum, Matt started his career as a sportswriter at the Los Angeles Daily News and has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and

View all posts by Matthew Kredell