NC Governor Signs Budget Raising Sports Betting Tax
Senate Bill 257 hikes online sports betting taxes and targets prediction markets — without regulating them.
North Carolina Governor Josh Stein signed Senate Bill 257 into law on July 7, 2026, raising the state's online sports betting tax rate and introducing a tax on prediction market platforms — even though the state stops short of formally regulating them, per SBC Americas.
Why It Matters
The dual move signals a growing appetite among state legislatures to capture revenue from prediction markets without committing to a full regulatory framework — a notable precedent other states may follow. Operators and platforms active in North Carolina now face a higher tax burden on sports betting handle, squeezing margins in an already competitive market. The decision to tax prediction markets without regulating them is legally and operationally ambiguous: platforms must pay, but receive no licensing protections, compliance pathways, or consumer-protection standards in return. For bettors, the lack of regulation means fewer formal safeguards on prediction market products available in the state.
Context
North Carolina legalized online sports betting in June 2023 and launched its market in March 2024, quickly becoming one of the more active regulated states in the Southeast. Prediction markets — platforms that let users trade contracts on real-world outcomes — have operated in a gray zone nationally, with federal regulators and state authorities still debating their classification as gambling versus financial instruments. Senate Bill 257 is among the first state-level actions to explicitly carve out a tax treatment for prediction markets independent of a licensing regime.
What's Next
The specific new tax rates take effect as part of the enacted budget cycle; operators should expect the revised withholding obligations to apply to eligible gross revenue from this point forward. Watch for legal challenges from prediction market platforms contesting taxation without a corresponding regulatory structure — that tension is likely to produce litigation or follow-on legislation.
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