North Carolina budget taxes prediction markets at 6% from Jan. 1, 2027

North Carolina’s new budget creates a 6% tax on prediction market operators’ net revenue from transactions involving state residents starting January 1, 2027, while formally recognizing Commodity Futures Trading Commission oversight for federally registered platforms rather than requiring a separate state license. The provision is part of Senate Bill 257, formally known as Session Law 2026-41, within the state’s roughly $34 billion budget. The law says CFTC-registered prediction markets such as Kalshi and Polymarket have satisfied state requirements and do not need a special North Carolina license, separate registration or compliance with special gaming rules. By contrast, the same budget raises the tax on sports betting operators to 23% of gross betting revenue from 18%, effective immediately, and licensed sportsbooks also pay a $1 million licensing fee. The measure is emerging as a notable model in a broader national dispute over whether prediction markets tied to sports and other events fall under federal commodities law or state gambling rules. Critics including Mick Mulvaney, who runs Gambling Is Not Investing, argue the lower-tax treatment favors what he called “unlicensed sports gambling apps,” while state Republican leaders said the law acknowledges activity already taking place. Some Democrats warned that sports betting tax revenue could suffer if operators shift toward prediction market structures. North Carolina’s approach differs from states such as Kentucky and Illinois, which have imposed state taxes or licensing requirements on prediction markets. Courts have also been split as Kalshi pursues challenges across several states, including an appeal to the U.S. Court of Appeals for the Second Circuit after a federal judge in New York declined to block state enforcement.