North Carolina Raises Betting Tax and Adds Prediction Market Levy
North Carolina Governor Josh Stein has signed Senate Bill 257 into law, the state’s first full budget in more than two years. Gambling-specific details reported by World Casino Directory show that the budget raises the tax on online sports betting operators from 18% to 23% of gross wagering revenue and introduces a separate tax on prediction market activity.
Stein’s office confirmed the governor signed SB 257 on July 7, alongside House Bill 56, a budget technical corrections bill. His statement focused on teacher pay, law enforcement salaries, Medicaid funding, child care, cybersecurity, community colleges, clean drinking water, and summer food programmes rather than gambling policy.
For betting operators, the change is immediate. Licensed online sportsbooks in North Carolina will now pay a 23% tax on gross wagering revenue, up from the 18% rate in place since the market launched in March 2024.
The increase applies to the state’s seven licensed online sportsbooks. Lawmakers had earlier considered a 36% rate, before they agreed on the final 23% level.
Prediction Markets Get Taxed, Not Licensed
In addition, the budget introduces a tax on prediction market companies that operate in North Carolina. From January 1, 2027, companies that offer event contracts will pay a 6% tax on net trading fee revenue from activity in the state.
The bill does not create licensing, registration, or other regulatory obligations for prediction markets. That distinction matters because operators such as Kalshi and Polymarket sit in an active legal debate over whether event contracts fall under federal commodities oversight or state gambling rules.
North Carolina takes a split approach: sportsbooks face a higher GGR-based tax under the state’s betting model, while prediction market firms face a narrower tax obligation from 2027. For compliance teams, that creates a useful signal. The state wants tax revenue from event contracts, but it has not yet chosen to treat those products like licensed gambling.
Sports Betting Revenue Allocation Changes
Alongside the tax increase, the budget changes how sports betting proceeds are allocated. The University of North Carolina at Chapel Hill and North Carolina State University will become eligible for sports betting tax funding from July 2027.
Schools within the University of North Carolina System already receive annual payments from sports betting revenue. Under the revised structure, universities can receive 20% of remaining tax revenue after required state allocations, with payments initially capped at $2.9m per institution.
Sports betting revenue will continue to support youth sports initiatives, gambling addiction treatment programmes, and the state’s general fund. The budget also caps annual funding for the Major Events, Games, and Attractions Fund at $30m.
Stein framed the wider budget as a compromise. He said it included “real flaws,” such as cuts to more than 1,000 state government positions and provisions he described as unconstitutional or hostile to local governments. Still, he said the budget showed that elected officials could “work together to get things done.”
💡TGJ Take
North Carolina did not take the 36% route, but the move from 18% to 23% still changes operator economics in a young market. FanDuel and DraftKings opposed the increase during the legislative process, and it shows that tax stability after launch is not guaranteed. Prediction market firms get a different message: the state wants revenue from event contracts, but has not put them under the sportsbook licensing model. Operators and compliance teams should read North Carolina as another case of a state using a budget bill to reshape gambling policy without reopening the licensing debate.
