Sports betting operator tax increases and a charge on prediction markets are officially coming to North Carolina.
Key Takeaways
- N.C.'s governor signed the state budget Tuesday.
- Sports betting tax increases from 18% to 23%.
- Prediction market operators will be taxed at 6% but won’t need an operating license.
Gov. Josh Stein announced his approval of the Tar Heel State’s $34-billion budget.
“After careful deliberation, this morning I will sign the state budget into law,” Stein said Tuesday.
When we work together across our differences and put people first, we can make good things happen. That’s why today I’m signing the budget. https://t.co/PkDBjm8X9a
— Governor Josh Stein (@NC_Governor) July 7, 2026
The fiscal 2025-26 budget includes a tax hike from 18% to 23% on seven online sportsbooks, a week after legislators formalized the plan.
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Major changes
North Carolina also adopted a distinct regulatory approach to prediction market platforms, like Kalshi and Polymarket, where they will be taxed 6%, effective Jan. 1, 2027. Trading exchanges that offer sports contracts are allowed to operate without state licensure or regulation.
Other states are currently involved in lawsuits with Kalshi, Polymarket, and others over alleged sports betting law violations.
Other gambling-related changes in the newly signed state budget include allowing bettors to deduct losses for tax purposes and a revamped sports betting tax allotment for the state's universities. UNC and NC State, the two biggest universities, will be added to the list of state-funded schools that will receive proceeds beginning July 2027.
Increasing state revenue
Sports betting operators, including FanDuel and DraftKings, opposed the state’s multi-year attempt to raise the sports betting operator tax. Still, lawmakers saw it as an opportunity to address a $2.8-billion budget deficit. North Carolina bettors have helped the state generate over $300 million in tax revenue at an 18% rate.
The House of Representatives passed the budget by an 88-21 vote Thursday, hours before the Senate also agreed to the plan with a 35-10 vote. It’s the first hike since wagering launched in March 2024, raising the Tar Heel State’s rate above those of larger markets like Massachusetts, Ohio, and New Jersey.
