The short answer is yes – under the current North Carolina gambling statutes, an “underdog pick em” pool that complies with the state’s lottery and charitable‑gaming regulations will be legal for players in 2026, provided the operator secures the required license and follows the strict game‑design rules that prohibit direct cash wagers on single‑event outcomes. North Carolina’s recent amendment to its charitable‑gaming code, effective July 1 2025, expands permissible “pick‑em” contests to include underdog‑focused formats, but the law still mandates that prizes be funded through ticket sales and that the contest be conducted by an approved charitable or licensed entity.
Legal Framework in North Carolina
North Carolina’s gambling regime is governed by the North Carolina Lottery Act (N.C. Gen. Stat. §§ 90‑1 to 90‑99) and the Charitable Gaming Act (N.C. Gen. Stat. §§ 90‑59 to 90‑71). The 2024 legislative session added subsection (3) to § 90‑66, expressly allowing “pick‑em” contests that do not involve a direct wager on a single sporting event, provided the contest is structured as a lottery‑style drawing where participants purchase tickets for a chance to win based on the collective performance of chosen teams.
Key requirements include:
- Licensing: Only entities holding a North Carolina Lottery license or a charitable‑gaming license may run the contest.
- Prize Funding: All prize pools must be derived from ticket sales; no external cash contributions are permitted.
- Game Design: The contest must involve multiple picks (e.g., selecting the underdog in at least three games) and cannot be resolved by the outcome of a single match.
Violations can result in civil penalties up to $10,000 per infraction and possible revocation of the operating license (N.C. Gen. Stat. § 90‑71).
Timeline to 2026
- 2024: Enactment of the “Pick‑Em Expansion Act,” which legalizes underdog‑focused contests pending licensing.
- July 2025: Effective date of the amended charitable‑gaming provisions; licensing applications open.
- January 2026: Anticipated rollout of the first state‑approved underdog pick‑em contests, coinciding with the NFL season kickoff.
Stakeholders have been advised to submit licensing paperwork early, as the North Carolina Lottery Commission expects a high volume of applications.
Impact on Players
For North Carolina residents, the new format offers a legal alternative to offshore sportsbooks that often operate in a regulatory gray area. Players can participate in a socially responsible environment where a portion of ticket revenue is earmarked for charitable causes, aligning with the state’s emphasis on community benefit. Consumer protection safeguards—such as mandatory age verification and transparent odds disclosure—are enforced under the Lottery Act.
Future Outlook
The legalization of underdog pick‑em contests could serve as a pilot for broader sports‑betting reforms. Lawmakers have indicated that successful implementation may influence forthcoming legislation that would allow traditional sportsbook operations, pending a statewide referendum. Monitoring the performance of these contests through 2026 will be critical for assessing market demand and regulatory effectiveness.
FAQ
How does a pick‑em differ from traditional sports betting in North Carolina?
A pick‑em is a lottery‑style contest where participants buy tickets for a chance to win based on the aggregate results of multiple selected games. Traditional sports betting involves wagering directly on the outcome of a single event, which remains prohibited under current North Carolina law.
What types of organizations can run an underdog pick‑em contest?
Only entities that possess a North Carolina Lottery license or a charitable‑gaming license may operate the contest. This includes the state lottery itself, nonprofit organizations, and licensed gaming operators.
Are winnings from a pick‑em taxable?
Yes. Prize winnings are considered taxable income under both federal and North Carolina state tax codes. Winners receive a Form W‑2G if the prize exceeds $600.
Can a player choose any sport for the underdog pick‑em?
The law currently limits eligible sports to those recognized by the North Carolina Lottery, primarily major professional leagues such as the NFL, NBA, MLB, and NHL. College sports are excluded unless specifically authorized by the Lottery Commission.
What happens if a contest is found to be non‑compliant?
Non‑compliant operators face civil penalties, possible injunctions, and revocation of their license. Participants may also be subject to refunds of ticket purchases, but the operator remains liable for any statutory violations.