- North Carolina has enacted a law recognizing the CFTC’s exclusive authority over prediction markets like Kalshi and Polymarket, breaking with states that treat them as gambling.
- The law imposes a 6% tax on platforms’ net trading fees attributable to North Carolina residents, far lower than the state’s 23% sports betting tax.
- The move follows a New York judge’s denial of Kalshi’s bid to block state gambling regulators, deepening a national legal split heading toward higher courts.
Governor Josh Stein signed Senate Bill 257 on July 7 as part of the state’s 2026 budget, declaring that a prediction market registered with the Commodity Futures Trading Commission may operate lawfully in North Carolina. The statute cites the Commodity Exchange Act’s exclusive federal regulatory authority over such platforms, leaving oversight to Washington.
The law takes a modest cut, taxing operators 6% of net trading fee revenue attributable to North Carolina residents starting January 1, 2027, without imposing any licensing or registration obligations. That contrasts sharply with the state’s simultaneous hike of its sports betting tax from 18% to 23%, and with stricter approaches elsewhere—Kentucky passed a 14.25% fee tax that prompted a CFTC complaint, while Illinois folded prediction markets into sports wagering with rules Kalshi is challenging in court.
North Carolina’s stance is an outlier amid a patchwork of state crackdowns. More than a dozen states have tried to treat prediction markets as unlicensed gambling, with the CFTC suing at least nine to defend its jurisdiction. Courts have split sharply, with platforms winning injunctions in New Jersey and Tennessee but losing in Maryland, Nevada, and Arizona.
The law lands days after the largest setback yet for Kalshi: a New York federal judge denied its request to block state gambling regulators, ruling the Commodity Exchange Act does not preempt New York’s laws on sports contracts. With opposing rulings, the dispute appears headed for the U.S. Supreme Court, while the CFTC completes national rules for event contracts whose public comment period closes July 27.
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