Many athletic directors at the state’s public universities have gotten used to pinching pennies to run their departments. They expected the trend to continue this year, with some even projecting multimillion-dollar deficits or significant staff cuts.
Instead, sports betting has become an unexpected fairy godmother, granting the universities millions in tax revenue.
Sports betting first went live in North Carolina in March. Since then, individual bets and promotional funds have added up to over $5.4 billion in total revenues, according to the North Carolina State Lottery Commission, which administers sports betting in the state.
By law, betting companies pay an 18% tax rate, with those funds distributed to several state agencies and organizations, including public university athletic departments.
Athletic directors originally expected to see a few hundred thousand dollars from the provisions. Less than a year later, they received five times as much: over $1.66 million each.
Western Carolina University’s Director of Athletics Alex Gary said the funding saved his department from cuts.
“Had it not been for the gaming receipts, we would have had to either cut expenses significantly,” Gary said. “Or depend on our university to bail us out. Or continue to ratchet up on student fees. I can’t express enough how much help we’ve gotten just off of taking care of expenses.”
Along with WCU, twelve other public universities are included in the sports betting mandate: Appalachian State, East Carolina, Elizabeth City State, Fayetteville State, N.C. A&T, NC Central, UNC Asheville, UNC Charlotte, UNC Greensboro, UNC Pembroke, UNC Wilmington, and Winston-Salem State.
The provision was initially created to help smaller athletic departments stay afloat. It also included $17 million of non-recurring funds, which the General Assembly appropriated to ten out of the 13 athletic departments. Schools received $10 million for the 2023-2024 school year and will evenly split the other $7 million this year.
Three schools aren’t included in the 13: The UNC School of the Arts doesn’t have an athletics department. The athletics departments at UNC-Chapel Hill and NC State weren’t included because both have multiple streams of revenue that smaller institutions don’t have access to, like multimillion-dollar media rights contracts.
Most other athletic budgets in the UNC System are funded through student fees, ticket sales, and donations, which UNC Pembroke AD Dick Christy said doesn’t begin to cover all the expenses it takes to run competitive programs.
“The smaller the school … the smaller the conferences, the less TV games, the less external revenue you have at your fingertips,” Christy said. “You sell less tickets. Corporate partnerships aren’t worth the same value. You don’t get a TV distribution from your conference. There’s a lot less revenue streams coming to you, which really puts pressure on an institution.”
According to the N.C. Department of Revenue, the 13 public universities collectively received $21,597,004 after sports betting went live in March to December of last year. The UNC System estimates university athletic departments will receive at least $2 million each — $26 million collectively— this year.
Although sports betting has been a financial boon for smaller athletic departments, the law has faced scrutiny from critics who warn it could lead to a rise in problem gambling, an addiction to which college students are especially vulnerable.
There’s some, although little, stipulation on how schools have to spend the money they receive from sports betting. The UNC Board of Governors has instructed chancellors to first use the funds to address deficits, decrease reliance on non-athletics fund revenues, and mitigate against rising student fee costs. Student athletic fees range from about $770 to $900 annually.
“The importance of using these (sports betting) funds is to help ensure our athletic programs are not operating in a deficit,” UNC System Chief Financial Officer Jennifer Haygood said at a BOG meeting in July. “And to improve the financial sustainability of the athletic programs, which for many of our institutions is a financial Achilles’ heel.”
WUNC reached out to all 13 universities receiving sports betting tax revenue to see how they are allocating their cut of the funds. Six responded with various details that included building new practice facilities, recovering from Helene, and plugging major budget holes.
Appalachian State
Appalachian State plans to use $3.3 million in sports betting revenue to help fund a new indoor practice facility. The project will cost at least $29 million total and is set to take almost a year and a half to complete.
According to the university, the current indoor practice facility is “nearing the end of its useful life” and doesn’t have enough space to accommodate the football team’s practices during bad weather.
The 50-yard football field also isn’t enough space for other groups to utilize the facility while the football team is practicing. That’s according to a UNC BOG presentation made by Dan Layzell, the university’s former vice chancellor of finance and operations, last year.
“Flat land is at a premium in our area,” Layzell said at the BOG meeting. “We have, over time, prioritized the use of that which we have for our academic facilities, residence halls, and other support facilities … as a result, the only large-scale general use practice areas for our athletic teams and other campus constituencies who use them are limited.”
The new facility will expand Appalachian State’s football field to 100 yards and also include a physical therapy clinic and athletics training space.
Athletics Director Doug Gillin said he will likely use future sports betting funds for travel-related expenses.
“Travel is key for us in a rural location. We have to drive two hours to the airport,” Gillin said. “The funding source relieves pressure on our operating budget, which is how we travel, how we train — food, lodging, other expenses. I think those are all things that this will help as we continue to grow. And certainly, college athletics is really changing, and that gives you some potential flexibility.”
Appalachian State’s athletics budget is about $48 million annually, according to Gillin.
N.C. A&T State University
In a statement to WUNC, Athletics Director Earl Hilton said he primarily plans to allocate sports betting funds to student health.
“Within the last few years, we have allocated funds toward extra trainers, strength and conditioning coaches, nutritionists, and mental health experts to work with our student-athletes,” Hilton said in the statement. “In the future, we hope to add personnel to enhance our productivity and improve the student-athlete experience.”
The HBCU’s athletics budget ranges from $15 million to $17 million annually, according to Hilton.
UNC Asheville
UNC Asheville’s cut of the funds will be used in several different areas, said athletics director Janet Cone. This includes salaries for the university’s athlete student services and compliance departments, as well as improving mental health programs for athletes.
Another top priority, Cone said, is to not increase UNC Asheville’s student fee rate. Most of the university athletic department’s $10 million budget comes from student fees and “direct institutional support” like fundraising and corporate sponsorships. UNC Asheville has the highest student fee in the UNC System at $906 per year.
“At some point in time, how high can you (keep) going?” Cone said. “The number one thing we’re doing is, we’re not going up on our student fee, and that is because we’re getting this revenue. So, I think that’s a real plus.”
Cone said the funds were also useful while the campus was navigating the aftermath of Helene.
When the storm touched down in western North Carolina back in September, it took out UNC Asheville’s power, water, and cell phone connectivity. The campus didn’t regain access to drinkable water until November, and students had to spend the rest of their semester taking classes online.
For student athletes, this meant relocating to sister campuses like UNC Charlotte, UNC Greensboro, High Point University, and Wofford College, where they stayed until the end of November. UNC Asheville is a Division I school, with about 300 student athletes across its various teams.
“We were in three different states, that was certainly an unexpected expense,” Cone said. “You still have to travel and feed them and continue to compete. And we all know it’s more expensive to compete on the road than it is at home, because you have that travel expense. So, this gave us a little bit of cushion, like ‘hey, I can make that decision to move forward during this storm.'”
Cone said her plan for future sports betting revenue is to continue improving the student athlete experience. This could include investments in student scholarships, nutrition, and facility improvements.
“There’s still a need on many of our campuses to improve facilities and provide this kind of experience that not only helps your campus, but helps your community,” Cone said. “When we’re bringing people to town for the Big South track meet and other (events), we’re an economic driver in our communities. So, having this additional revenue helps us help others too.”
UNC Pembroke
Athletics director Dick Christy said had it not been for sports betting, UNC Pembroke’s athletics department would be facing a $1.7 million deficit.
“We were getting further and further in the red, making it harder and harder to provide a sustainable experience,” Christy said. “So, sports betting has really been very timely for us to be able to not have to go backwards on the type of services we’re providing. And actually be able to get ahead, maybe, on chipping into that deficit.”
The Historically Minority Serving Institution (HSMI) is one of four Division II schools in the UNC System. Christy said DII schools are probably the most resource-starved in the System, since they typically have fewer ticket sales and smaller-scale media rights deals. This in turn makes them more dependent on student fees.
UNCP charges $817 in athletic fees for in-person, on-campus students. Anyone outside of this demographic doesn’t have to pay the fee. Christy said this creates a unique problem for UNCP, which has been growing its online course offerings.
“As our student body has transformed, there’s actually less students paying the athletic fee than at any time since I’ve been here,” said Christy, who’s been UNCP’s AD for 12 years. “So while the institution from a student enrollment standpoint is doing well, the actual funding model and the way the System sets it up is becoming more and more broken as we have more and more online students.”
Christy said his department has about a $5 million budget, but they need at least $2 million a year from sports betting to make it financially sustainable. If they are able to bring in more than that, Christy has plans to invest the money in nutrition, healthcare, and mental health programs.
“There’s a million things that new money would go to that we could easily use,” Christy said. “But the main thing is trying to make sure we can sustain the product that we’ve been providing in the last couple of years.”
Christy’s vision for the department in the next couple of years is to make an Elite Eight, Final Four, or even national championship run. He said how reliable sports betting becomes will have a “direct impact on whether or not we can achieve those goals.”
Western Carolina
Athletics Director Alex Gary said his department has faced several “inflationary pressures” since COVID that ticket sales and the university’s $817 student athletic fee — the department’s main source of revenue — haven’t been keeping up with.
“As an FCS Division I institution, we don’t have huge sponsorship deals, and so our revenues are primarily fixed,” Gary said. “And obviously, as a school like Western Carolina University, that’s not one of the flagships in the state, we’re not able to command significant ticket prices. Our stadiums are smaller, and the demand for our product is really great at Western, for us, but we don’t sell 60,000 tickets to games.”
During the pandemic, the athletic department missed out on ticket and parking revenues, but still had to keep paying for student scholarships and staff. Compounded with rising costs for hotels and buses, as well as legislatively mandated increases for employee salaries, Gary said the athletic department was left with little room to operate.
Sports betting has helped fill the gaps, Gary said.
“What the gaming receipts have allowed us to do is make sure we can keep our coaches,” Gary said. “We don’t have to cut scholarship opportunities for student athletes. All sorts of things … that to be honest, we couldn’t afford to fund if it wasn’t for the gaming receipts.”
Gary said his hope is sports betting continues to bring in at least $1.5 million annually for WCU’s athletics department. Once he’s able to balance out the department’s general expenses, Gary said he plans to hire more assistant coaches.
Currently, WCU’s volleyball, women’s soccer, and softball teams only have one full-time assistant coach, even though the NCAA allows universities to have more.
“Our normal budget doesn’t cover many of the things that are associated with just minimum NCAA standards,” Gary said. “So, as we continue to try to be competitive and provide our student athletes and our coaches with what they need to be on par with what happens in our conference, those are the things that we need to address if the revenue allows us to do that.”
Winston-Salem State
Winston-Salem State is using a combination of the non-recurring state appropriations and sports betting funds to make facility upgrades. Athletics director Etienne Thomas said this will include improvements to the HBCU’s basketball venue and locker rooms, tennis courts, and fueling station.
“Being able to spend the resources to upgrade facilities and give (athletes) those opportunities for improved facilities — those that they see across town or those that they see at other campuses — is really important,” Thomas said. “You want to have the best facilities you can have, and not just those that you patchwork together.”
The HBCU is a Division II school and operates with about a $3.5 million budget, according to Thomas.
Most of the department’s funding comes from athletic fees, which WSSU charges students $780 annually. Thomas said the money is mostly used for scholarships, salaries, and recruiting.
The additional sports betting revenue will also help further the HBCU’s recruiting efforts, as well as cover some travel and personnel expenses. But Thomas said sports betting revenue will have to scale up even more to help WSSU become a top 5 or top 10 DII school.
“To be a powerhouse in Division II — not just in the state, not just in our conference — you’re looking at about a $7 million budget,” Thomas said. “So, you’re talking about $3 million, $3.5 million annually in sports betting.”
The following universities declined to provide details or did not respond to interview requests: East Carolina, Elizabeth City State, Fayetteville State, NC Central, UNC Charlotte, UNC Greensboro, and UNC Wilmington.
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