North Carolina's budget law defers prediction market regulation to the CFTC and sets a 6% tax rate, below other states' proposals.
Regulation & Gov ·
North Carolina has enacted legislation establishing that federal regulators hold primary authority over prediction market platforms, a stance that diverges sharply from efforts by other states to impose gambling-style restrictions. Governor Josh Stein signed the measure into law on July 7 as part of the state budget, declaring that any prediction market registered and licensed by the CFTC operates lawfully within state borders. The law imposes a 6% tax on trading fees attributable to North Carolina residents starting January 1, 2027, with no accompanying licensing or regulatory requirements tied to the levy.
The 6% rate positions North Carolina's approach as substantially more permissive than competing frameworks. North Carolina itself taxes sports betting operators at 23% of wagering revenue, while other states have pursued steeper prediction market levies—Kentucky enacted a 14.25% transaction fee tax that prompted a CFTC complaint, and Illinois incorporated prediction markets into sports wagering rules with tiered taxes and licensing obligations that Kalshi has challenged in court. Over a dozen states have moved to classify prediction markets as unlicensed betting, generating ongoing litigation across multiple jurisdictions.
The timing underscores a deepening national divide. North Carolina's recognition of federal authority arrives as courts have issued conflicting rulings—platforms have secured injunctions in some states while losing in others—and a New York federal judge recently denied Kalshi's effort to block state gambling regulators, finding federal law does not preempt New York's gambling statutes. The CFTC is finalizing national event contract rules with a public comment period closing July 27, suggesting resolution may ultimately hinge on federal rulemaking or appellate review.