Unique Approach to North Carolina Prediction Market Tax
Jesse M. Cox Published 14/07/2026
While imposing a 6% tax on prediction markets in its state budget for the 2027 fiscal year, North Carolina was also taking a unique approach in announcing this levy. In doing so, North Carolina became the first state in the country to formally recognize the authority of the Commodity Futures Trading Commission (CFTC) over prediction markets. In many states, there are court challenges ongoing to determine whether prediction markets can be regulated by state gaming authorities.
For prediction market sites currently regulated by the CFTC, this is a big deal. Sites like Kalshi and Polymarket know that they can operate in North Carolina without worry about action being taken against their sites by state gaming regulators.
North Carolina is a trend setter when it comes to prediction markets
There are plenty of battleground states in the fight against prediction markets, but the Tar Heel State isn't one of them. North Carolina has decided to make love, not war, as long as the prediction market sites are willing to share the wealth.
That's got to be a relief to the legal teams at both Kalshi and Polymarket. They've been racking up overtime, engaging in legal battles with state gambling regulators in states like Michigan, New Mexico, and New Jersey. Michigan recently won a temporary injunction, forcing Kalshi to cease offering sports-event contracts in Michigan for 14 days.
There's no concern of that happening in North Carolina. Prediction market platforms that already get their licensing from the CFTC won't require a separate state license to operate in North Carolina.
Before passing this state budget, there was no framework in place to tax prediction markets in North Carolina. The only requirement of operators previously was to pay the standard 2.25% corporate income tax that all businesses in the state must pay to operate.
Governor Josh Stein signed SB 257, the state's $34 billion budget bill, into law. All aspects of the bill, including the 6% tax on prediction market sites, will go into effect on January 1, 2027.
Lawmakers express mixed emotions over this decision
It would be wrong to suggest that this new prediction market tax was a prominent part of the state budget. State officials were tucking the announcement of the change into Page 626 of the state budget bill.
While it's true that now, they will be facing a targeted 6% levy on net trading fees when operating in the North Carolina market, in the long run, it's a win-win for the prediction market sites. There's no worry of any legal action being taken against them simply for operating in the state.
Some members of the state legislature feel it's only natural to recognize the arrival of prediction market sites.
“It's pretty clear that it's something that seems to be growing both in popularity and in terms of just recognition that it's out there,” Senate leader Phil Berger told WRAL. “Whether it's something that eventually is going to take over from the sports betting, I don't know.”
Others aren't so certain that embracing prediction markets is the route to take.
“There’s no reason a state should favor these rogue operators over the licensed sportsbooks who fully comply with regulations and tax structures,” Mick Mulvaney, President Donald Trump’s former chief of staff, told WRAL in a written statement. Mulvaney now serves as director of the group Gambling Is Not Investing. They advocate for consumer protections and other regulations in the gaming industry.
Prediction market sites are getting off easy
Compared to sports betting sites, prediction markets are getting off easy in North Carolina.
Sportsbooks saw the budget jump their tax rate fron 18% to 23%. That's a 28% increase in one year.