North Carolina’s proposed 2026 budget establishes a fixed funding cap for Historically Black Colleges and Universities (HBCUs) sourced from sports betting tax revenue, replacing a more flexible percentage-based allocation. According to legislative budget documents, this shift creates a financial “ceiling” that limits how much institutions like North Carolina A&T State University and North Carolina Central University can receive, regardless of how much the state’s legal gambling market grows.
How does the proposed 2026 budget change HBCU funding?
The North Carolina General Assembly is moving toward a capped appropriation model for sports betting funds allocated to HBCUs. Previously, the framework suggested a percentage of the 6.75% tax rate applied to sports betting handles. The new budget proposal transitions these payments into fixed dollar amounts. This means that while the state’s total tax collections may increase as more residents use sportsbooks, the amount flowing to HBCUs will remain stagnant once the cap is reached.
This change effectively decouples university funding from the actual performance of the sports betting industry. While the state continues to collect millions in tax revenue from operators like FanDuel and DraftKings, the universities will not see a proportional increase in their budgets.
Where is North Carolina’s sports betting revenue going?
North Carolina launched legal sports betting in March 2024. The state imposes a 6.75% tax on the gross gaming revenue of sports wagering operators. According to the North Carolina General Assembly, the bulk of these funds are directed into the state’s general fund to support broader public services.
The specific carve-out for HBCUs was designed as a social equity measure to ensure that institutions serving marginalized communities benefited from the new industry. However, the transition to a capped model suggests a legislative preference for budget predictability over shared growth with these institutions.
Why does a funding “ceiling” matter for NC HBCUs?
A funding ceiling limits the ability of universities to plan long-term capital improvements or permanent faculty hires. When funding is tied to a percentage, the revenue grows alongside the market. With a cap, the real value of the funding decreases over time due to inflation.
This development contrasts with other state-level gambling models where a fixed percentage of revenue is often dedicated to education or infrastructure. By setting a ceiling, North Carolina ensures that the state treasury retains any “windfall” profits from an unexpectedly successful betting market, rather than those profits flowing to the designated HBCUs.
| Funding Model | Impact of Market Growth | Budget Predictability |
|---|---|---|
| Percentage-Based | University funding increases as betting volume rises. | Lower; revenue fluctuates with betting trends. |
| Capped (Proposed 2026) | University funding stays flat regardless of growth. | Higher; the state knows the exact cost. |
What happens next for sports betting in North Carolina?
The 2026 budget proposal must still pass through the legislative process, where it may be subject to amendments. Advocates for HBCUs are likely to scrutinize the specific dollar amount of the cap to determine if it provides sufficient support for the institutions’ needs.
As the state enters the second year of legal sports betting, the actual tax data from 2024 and 2025 will provide the benchmark for whether the proposed cap is a fair reflection of the industry’s contribution to the state’s educational institutions.
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