North Carolina Enacts Taxes on Prediction Markets, Sports Betting

North Carolina Governor Josh Stein signed a budget bill Tuesday, July 7, 2026, implementing a 6% tax on prediction market net trading fee revenue and increasing the state’s sports betting tax to 23%. This decision makes North Carolina the third U.S. state to tax prediction markets, joining Kentucky and Illinois.

What Happened

North Carolina Governor Josh Stein signed a $34 billion fiscal year 2026 budget bill on Tuesday, July 7, 2026, which includes new taxation measures for prediction markets and an increase in existing sports betting taxes, according to Bloomberg Tax News. The bill imposes a 6% levy on the net trading fee revenue generated by companies operating prediction platforms.

Additionally, the budget bill (SB 257) raises the tax rate on sports betting from 18% to 23%. State revenue officials have also been granted new authority to audit sports bettors’ records, Bloomberg Tax News reported. The debate surrounding this measure reportedly lasted over a year before a deal was reached last week by the Republican-controlled legislature to resolve the budget stalemate.

Key Details

• North Carolina is now the third U.S. state, following Kentucky and Illinois, to tax prediction markets, according to Bloomberg Tax News.
• The new levy for prediction markets is set at 6% of the net trading fee revenue generated by platform operators, as stated by Bloomberg Tax News.
• The budget bill (SB 257) increases the sports betting tax from 18% to 23%, and grants state revenue officials new powers to audit sports bettors’ records, Bloomberg Tax News reported.
• Governor Stein reportedly stated that while the budget delays further tax cuts, it maintains “future reckless pre-programmed tax cuts for corporate shareholders and the wealthy.”
• The state is seeking additional revenue to address a potential $2.8 billion budget deficit over the next two years, partially due to cuts in personal and corporate income taxes, Bloomberg Tax News reported.

Why It Matters

The implementation of these taxes signifies North Carolina’s move to generate additional state revenue, particularly within regulated markets. This decision comes as the state seeks to mitigate a projected $2.8 billion budget deficit amidst ongoing cuts to personal and corporate income taxes, as reported by Bloomberg Tax News. The taxation of prediction markets places North Carolina alongside other states exploring these platforms as a source of public funds.

The regulatory landscape for prediction markets remains a subject of legal debate, with questions surrounding whether they are classified as federally regulated commodity markets or gambling platforms subject to state regulation, according to Bloomberg Tax News. Kalshi, a prediction market platform, reportedly sued Illinois last month after that state incorporated prediction markets into its Sports Wagering Act tax scheme. This development in North Carolina adds to the evolving regulatory framework for such platforms within the United States.

What’s Next

Governor Stein’s office did not comment on the prediction markets tax, according to Bloomberg Tax News. Kalshi and Polymarket, prominent prediction market platforms, did not immediately respond to requests for comment regarding North Carolina’s budget. The state’s revenue officials now possess new authority to audit sports bettors’ records, as reported by Bloomberg Tax News.

Originally reported by Bloomberg Tax News·Published 7 Jul 2026, 16:19