North Carolina becomes the first U.S. state to impose a 6% tax on prediction markets, effectively acknowledging federal jurisdiction.

North Carolina imposes a light 6% tax on prediction markets, becoming the first state to recognize CFTC federal jurisdiction.
(Previous: U.S. Senators Unanimously Ban Prediction Markets)
(Background: Polymarket's Dark Origins: DARPA Intelligence Program Reincarnated)

Table of Contents

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• One State First: Prediction Markets vs Sports Betting, Different Tax Rates
• CFTC Jurisdiction Battle: States Still in Court
• Same-Day Parallel Developments: Goldman Bans Employee Trading, Polymarket Applies for Margin Qualification

North Carolina has become the first U.S. state to recognize the legality of CFTC-registered prediction markets without requiring platforms to obtain a state-level license. The state's newly signed FY2027 budget explicitly adopts a "light tax + federal jurisdiction" dual-track strategy: prediction markets pay a 6% tax, while sports betting rises from 18% to 23%.

According to reports, the North Carolina budget, effective January 1, 2027, imposes a 6% tax on net trading fee income for prediction market platforms such as Kalshi and Polymarket, while increasing the sports betting tax rate from 18% to 23%.

One State First: Prediction Markets vs Sports Betting, Different Tax Rates

The core design of the budget is straightforward: a 6% tax rate for prediction markets and 23% for sports betting. The North Carolina State Treasurer stated that prediction markets are an "emerging industry" and should not be subject to the same tax system as sports betting.

In contrast, neighboring Kentucky imposes a 14.25% excise tax on prediction markets, while Illinois incorporates prediction markets into its sports betting regulatory framework — both facing platform lawsuits. North Carolina's low-tax approach essentially adopts a "concession for tax revenue" strategy that acknowledges CFTC federal oversight.

CFTC Jurisdiction Battle: States Still in Court

Currently, U.S. federal courts are divided on the jurisdiction over prediction markets:

• Kalshi Wins: Courts in New Jersey (March) and Tennessee (May) ruled that prediction markets are "event contracts" and should be under CFTC jurisdiction
• Kalshi Loses: Courts in Maryland, Nevada, Arizona, Ohio, and the Southern District of New York ruled that states have the right to regulate independently
• Latest Developments: The CFTC has sued at least nine states to defend its jurisdiction over event contracts

Market observers widely expect that this jurisdictional dispute will ultimately be decided by the U.S. Supreme Court.

Same-Day Parallel Developments: Goldman Bans Employee Trading, Polymarket Applies for Margin Qualification

On July 10, the day the North Carolina budget was signed, two related developments occurred in the prediction market space:

• Goldman Sachs Bans Employee Trading: Goldman Sachs Group announced a ban on employees engaging in prediction trading on financial and political markets; repeated violations could lead to termination or forfeiture of profits
• Polymarket Applies for Legal Margin Trading: According to Bloomberg, Polymarket has applied through an affiliated company to register as a Futures Commission Merchant (FCM); if approved, users could place bets on event outcomes with less upfront capital

The North Carolina budget shows that prediction markets are moving from "neglected" to "incorporated into state finances." The 6% light tax path is both a de facto recognition of federal jurisdiction and a genuine reflection of the emerging industry's expansion momentum in 2026.