North Carolina Raises Taxes on Sports Betting and Prediction Markets

North Carolina Governor Josh Stein has signed the state's new budget into law, officially increasing taxes on online sports betting operators while introducing a new tax on prediction market platforms.

Under the approved budget, the tax on online sportsbook revenue will increase from 18% to 23%, while qualifying prediction market operators will be subject to a 6% tax on net trading fee revenue. The measures are part of the state's $34 billion fiscal year 2026 budget and take effect as North Carolina looks to capture more revenue from the growing online wagering sector.

The legislation makes North Carolina one of the first states to specifically tax prediction market operators through state law.

New Tax Rules Target Two Growing Markets

The biggest change for sportsbooks is the increase in the state's online betting tax rate. Since launching legal online sports betting in 2024, North Carolina has become one of the country's fastest growing regulated markets. Lawmakers said the higher tax will help generate additional revenue while the industry continues to expand.

The budget also introduces a new 6% tax on the net trading fee revenue earned by prediction market operators such as Kalshi and Polymarket. Although prediction markets are regulated at the federal level by the Commodity Futures Trading Commission (CFTC), North Carolina lawmakers decided the industry should also contribute tax revenue as it continues to grow.

Prediction Markets Gain Official Recognition

Beyond taxation, the new law gives prediction markets a clearer place within North Carolina's legal framework. Supporters of the measure say it provides certainty for an industry that has attracted growing interest across the U.S., while ensuring operators contribute to state finances.

North Carolina is among the first states to directly address prediction markets in its legislation rather than relying solely on existing gambling or financial laws. The move comes as several other states continue challenging prediction market operators through lawsuits, cease and desist orders and proposed legislation.

More States Are Looking at Prediction Markets

North Carolina's decision reflects a growing interest among lawmakers in how prediction markets should be treated. While some states have questioned whether sports event contracts should be allowed at all, North Carolina has instead chosen to tax the sector while recognising its presence in the market.

For operators, the new law brings additional costs but also offers greater clarity in one of the country's largest emerging wagering markets. As prediction markets continue to expand, more states could consider similar approaches in the next months.

A Milestone for the Industry

The approval of North Carolina's budget marks another important moment for both sports betting and prediction markets. For sportsbooks, it means operating under a higher tax rate in an increasingly competitive market.

For prediction market operators, it represents one of the first examples of a U.S. state introducing a dedicated tax while formally recognising the sector in state legislation. As lawmakers across the country continue evaluating prediction markets, North Carolina's approach could become a model other states choose to follow.

Stay tuned to UMG Gaming for more updates on prediction markets, sports betting, and the latest regulatory developments across the United States.