North Carolina's newly signed budget lifts the online sports-betting tax from 18% to 23% of gross wagering revenue and creates a 6% tax on prediction-market operators, the first state levy of its kind. The higher rate makes North Carolina one of the costlier US markets for licensed sportsbooks.
North Carolina's newly signed budget lifts the online sports-betting tax from 18% to 23% of gross wagering revenue and creates a 6% tax on prediction-market operators, the first state levy of its kind. The higher rate makes North Carolina one of the costlier US markets for licensed sportsbooks.
Democratic Governor Josh Stein signed the state's two-year, $34bn budget on Tuesday 7 July, enacting a sharp rise in the tax applied to licensed online sportsbooks. The operator tax on gross wagering revenue climbs from 18% to 23%, the first increase since North Carolina's mobile betting market went live in March 2024.
At 23%, North Carolina now taxes sports-betting revenue more heavily than several established US markets, exceeding the headline rates in Massachusetts, Ohio and New Jersey. The change was passed as part of a wider fiscal package: the state House approved the budget 88-21 on 2 July and the Senate followed 35-10, with lawmakers presenting the measures as part of the response to a budget shortfall of roughly $2.8bn.
The budget also breaks new ground by creating a 6% tax on the net revenue of qualifying prediction-market operators. The provision is notable because it taxes those operators without requiring them to obtain a state operating licence, a structure that sits awkwardly alongside the licensing regime imposed on conventional sportsbooks and one that has no clear precedent among US states on the regulatory map.
Alongside the rate rise, the budget allows bettors to deduct their losses when calculating state tax, and adds the University of North Carolina at Chapel Hill and North Carolina State University to the list of institutions eligible for a share of betting-tax proceeds from 1 July 2027.
The sums involved are already material. Licensed operators contributed about $133m in state taxes during the 2026 fiscal year at the 18% rate, according to state figures; the higher rate would have generated more than $170m over the same period, an indication of the scale of the additional revenue the state is now counting on.
A 23% Rate Tests How Much Margin Operators Will Absorb
The five-point jump is significant because it lands on gross wagering revenue, not profit, and it pushes North Carolina above peer markets that operators use as reference points. Sportsbooks facing a heavier tax burden tend to respond by trimming promotional spend and offering less generous pricing, which erodes the value proposition for customers and, at the margin, weakens the licensed market against unlicensed alternatives. Against that, North Carolina is a sizeable market that operators are unlikely to abandon over a single increase, and the loss-deduction provision softens the blow for bettors. The open question is whether 23% is a ceiling or the first move in a wider trend of states raising rates once a market has matured.
Taxing Prediction Markets Without Licensing Them Is a Telling Compromise
The 6% prediction-market levy is the most revealing part of the budget. North Carolina wants a share of the revenue that platforms such as Kalshi generate, but it has chosen to tax them rather than fold them into the licensing regime that governs sportsbooks, leaving those operators outside the state's normal consumer-protection and compliance perimeter. That is a pragmatic way to capture money from a fast-growing category the state has not resolved legally, at a time when the status of prediction markets is being fought over in courts elsewhere and even established sportsbooks are approaching the category with caution. It also creates an obvious tension: an operator that is taxed but unlicensed is being treated as legitimate enough to levy, yet not regulated like the competitors it sits alongside.
The Budget Math Now Leans on Betting Revenue
With about $133m already flowing to the state at 18% and a higher rate designed to push that figure well beyond $170m, North Carolina has tied a growing budget line to a competitive and inherently volatile revenue source, and done so explicitly to help close a $2.8bn shortfall. Betting revenue rises and falls with sporting calendars, operator margins and customer behaviour, none of which the state controls. The rate rise will raise real money, and the loss-deduction and university provisions give it political ballast. Whether it proves a durable source of funding, or one that erodes as operators and customers adjust, is the test the next two budget cycles will set.
