North Carolina has become one of the first US states to formally introduce a tax structure for prediction markets while also increasing the financial obligations for licensed sports betting operators.
The measures were included in the state’s new budget package signed by Governor Josh Stein, marking a significant development in the debate over how event-based trading platforms should be regulated and taxed. The legislation creates a 6% tax on net trading fee revenue generated by prediction market operators.
Prediction markets, which allow users to buy and sell contracts tied to the outcome of events such as elections, economic indicators and sporting competitions, have expanded rapidly in the US. Platforms operating under federal oversight from the Commodity Futures Trading Commission (CFTC) have argued that their products are financial contracts rather than traditional gambling.
The move comes as states continue examining how companies such as Kalshi and Polymarket fit into existing gambling frameworks. Some gaming industry groups have argued that sports-related prediction contracts create direct competition for licensed sportsbooks while avoiding many state-level requirements.
Alongside the new prediction market tax, North Carolina has increased its online sports wagering tax rate from 18% to 23% of operators’ gross wagering revenue. Licensed sportsbook operators are also subject to the state’s existing regulatory requirements, including licensing fees.
The budget also introduces changes for players by allowing taxpayers to deduct gambling losses against winnings under certain conditions, addressing an issue that emerged after online sports betting launched in North Carolina in March 2024.
The decision highlights a growing nationwide discussion over prediction markets. While supporters say taxation provides clarity for an emerging industry, critics argue that event contracts involving sports resemble betting products and should face comparable regulation.
With prediction markets continuing to grow and legal disputes ongoing in several states, North Carolina’s approach could influence how other jurisdictions handle the fast-expanding sector.