North Carolina to Tax Prediction Markets Like Kalshi at 6% Starting 2027

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North Carolina to Tax Prediction Markets Like Kalshi at 6% Starting 2027

North Carolina has become the first U.S. state to explicitly recognize and tax federally regulated prediction markets, introducing a 6% tax on platforms such as Kalshi and Polymarket. The measure was signed into law by Governor Josh Stein on July 7 as part of a $34 billion state budget for the fiscal year.

Budget Details and Tax Structure

The new legislation immediately raises the tax rate on online sports betting from 18% to 23%, while the 6% tax on prediction market revenue will take effect on January 1, 2027. The delayed implementation gives platforms and operators time to prepare for compliance. Notably, North Carolina will not require prediction market operators to obtain separate state gambling licenses or adhere to existing gambling regulations, distinguishing them from traditional sportsbooks.

Regulatory Implications and Industry Reaction

Gaming industry analyst Dustin Gouker noted that this marks the first instance of a state acknowledging that a U.S. Commodity Futures Trading Commission (CFTC)-registered prediction market is federally legal, without imposing its own licensing or regulatory framework. This approach could serve as a model for other states grappling with how to treat prediction markets, which operate in a legal gray area between gambling and financial derivatives.

What This Means for Platforms and Users

For platforms like Kalshi and Polymarket, the tax introduces a new cost of doing business in North Carolina but provides regulatory clarity. Users in the state can continue to trade on these platforms without the threat of state-level enforcement actions. The move signals a growing acceptance of prediction markets as legitimate financial instruments, provided they comply with federal oversight.

Conclusion

North Carolina’s decision to tax rather than ban prediction markets represents a pragmatic regulatory approach. By recognizing CFTC oversight and avoiding duplicative state licensing, the state sets a precedent that could influence future legislation in other jurisdictions. The 2027 effective date gives stakeholders ample time to adapt, while the immediate sports betting tax increase underscores the state’s focus on revenue generation from gambling-related activities.

FAQs

Q1: Which prediction markets are affected by the new tax?
The 6% tax applies to platforms registered with the U.S. Commodity Futures Trading Commission (CFTC), such as Kalshi and Polymarket. Unregistered platforms may face different regulatory treatment.

Q2: When does the prediction market tax take effect?
The tax is scheduled to take effect on January 1, 2027, as part of the state’s fiscal year budget signed on July 7, 2025.

Q3: Will prediction markets be treated like sports betting in North Carolina?
No. While the budget increased the online sports betting tax to 23%, prediction markets face a separate 6% tax and are not subject to the state’s gambling licensing or regulatory requirements.

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