According to the 2027 budget bill signed by North Carolina on July 10, 2026, starting from January 1, 2027, prediction market platforms such as Kalshi and Polymarket will be required to pay a 6% net trading fee income tax. This effectively serves as a "concession in exchange for taxation," acknowledging federal regulation authority by the CFTC.
Core Provisions of North Carolina's 2027 Budget Bill: 6% Tax Rate
Under the 2027 budget bill signed by North Carolina on July 10, 2026, the tax framework for prediction markets is as follows: prediction market platforms will pay a 6% net trading fee income tax (17 percentage points lower than the 23% sports betting tax); platforms are not required to obtain state licenses (federally under CFTC jurisdiction); the sports betting tax rate is increased from 18% to 23%; effective date is January 1, 2027.
The North Carolina Department of Finance characterizes prediction markets as an "emerging industry," applying a different tax framework.
Current Status of CFTC Jurisdiction Disputes: Kalshi Wins and Loses by State
According to reports, there are still disagreements in U.S. federal courts over jurisdiction over prediction markets, with rulings as follows:
Kalshi Wins: New Jersey (March 2026), Tennessee (May 2026) courts ruled prediction markets are "event contracts" subject to CFTC jurisdiction.
Kalshi Loses: Maryland, Nevada, Arizona, Ohio, and the Southern District Court of New York ruled that each state has the authority to regulate independently.
CFTC Litigation Actions: The CFTC has filed at least nine lawsuits against states to defend its federal jurisdiction over event contracts.
Market analysis generally believes this jurisdiction dispute may ultimately be brought before the U.S. Supreme Court; the specific legal outcome will depend on official court rulings.
Frequently Asked Questions
Why is North Carolina’s prediction market tax rate of 6% lower than the 23% sports betting tax?
According to reports, North Carolina’s Department of Finance classifies prediction markets as an "emerging industry," believing they should not be subject to the same tax regime as sports betting. The 6% light tax route is also a concession to recognize CFTC federal jurisdiction—offering a lower tax rate in exchange for tax revenue, while avoiding conflicts with federal regulatory frameworks.
How does North Carolina’s approach differ from other states?
Reports indicate Kentucky imposes a 14.25% consumption tax on prediction markets, while Illinois incorporates prediction markets into its sports betting regulatory framework, both facing platform lawsuits. North Carolina’s choice of a 6% low tax rate combined with exemption from state licenses makes it the first U.S. state to explicitly adopt a "federal jurisdiction + state-level light tax" dual-track strategy.
What does Polymarket applying for FCM status signify?
According to Bloomberg, Polymarket has applied through an affiliated company to register with the CFTC as a Futures Commission Merchant (FCM). If approved, users will be able to participate in event contract betting with less upfront capital, marking an important step toward further legitimizing Polymarket’s operations in the U.S. market. The specific progress depends on official approval from the CFTC.
