North Carolina Sets 6% Tax on Prediction Market Operators as Election-contract Debate Grows

State of Play’s TL;DR

• North Carolina’s new budget includes a 6% tax on prediction market operators.
• The measure takes effect in January.

North Carolina’s new state budget includes a 6% tax on prediction market operators’ net trading fee revenue, adding a fresh regulatory wrinkle to the debate over election-related contracts on platforms such as Kalshi and Polymarket.

The measure was included in the state’s $34 billion budget bill signed into law by Gov. Josh Stein in July. The tax is expected to generate about $1 million in the 2026-27 fiscal year and takes effect in January.

The development matters because prediction markets have become a growing point of overlap between financial regulation, gambling policy, and election ethics. Unlike traditional sports betting, prediction markets let participants buy and sell contracts tied to future outcomes, including election winners, margins of victory, and which party will control Congress in the next legislative session.

North Carolina adds tax policy to a broader prediction market fight

The WFAE discussion framed prediction markets as a rising policy issue in North Carolina and beyond, particularly as election-cycle contracts gain attention. Sports betting has already been debated in the state for years, but election-related markets are raising a different set of questions for lawmakers, regulators, and the public.

At the center of that debate is whether these products should be treated as gambling or as a different kind of financial market. That distinction could shape how states and regulators approach taxation, oversight, and consumer protections.

The source identifies Kalshi and Polymarket as key platforms offering election contracts. Users on those marketplaces can trade on political outcomes rather than place a fixed wager in the same format used in conventional sportsbooks.

Ethics, youth access, and regulation remain open questions

The WFAE segment focused on rising concerns around ethics, youth engagement, and the idea of betting on elections. It also raised the broader question of what regulatory model should apply if prediction markets continue to expand.

What is clear is the immediate timeline in North Carolina: the new tax takes effect in January. What remains less clear, based on the discussion summary, is what specific additional rules policymakers may pursue or how state authority could intersect with federal oversight.

The program’s guests were Michelle Malkin, Danny Funt, and Harry R. Lloyd, who discussed whether prediction markets represent gambling, a new financial avenue, or something in between.

For operators, the North Carolina budget provision is a concrete policy change. For the broader industry, it is another sign that states are beginning to address prediction markets not just as a legal curiosity but as a taxable and increasingly scrutinized part of the wagering landscape.

Based on reporting by WFAE 90.7 (NPR).