North Carolina taxes prediction markets at 6% in signed state budget
North Carolina Governor Josh Stein signed a $34 billion state budget on Tuesday that creates a 6% tax on prediction market operators' net trading fee revenue, effective January 1, 2027. The measure raises the online sportsbook tax to 23%. Budget bill Senate Bill 257 treats prediction markets as federally preempted by the CFTC rather than subject to state gambling regulation. North Carolina joins Kentucky and Illinois in imposing such taxes.
The North Carolina tax gives Kalshi and Polymarket a new problem: a third state has found a way to extract revenue without conceding regulatory authority. The 6% rate is deliberately set below the sportsbook levy because lawmakers accept CFTC preemption over gambling rules, but they still want the money. That split logic invites copycat statutes. Every additional tax narrows the margin advantage CFTC-registered platforms hold over offshore competitors.
Kalshi is already stretched across five state fights; Polymarket faces identical exposure. The January 2027 effective date gives operators eighteen months to either challenge the levy in federal court or absorb it and risk more states following suit. A federal ruling that CFTC preemption blocks state taxes would kill this model; silence invites more.
North Carolina joins Illinois and Kentucky in testing whether state tax regimes can stick to CFTC-registered platforms without regulating them, as Kalshi fights Illinois's 15% gross receipts levy in federal court on preemption grounds.