North Carolina Taxes Prediction Markets at 6%
State recognises CFTC preemption but claims a cut of net trading fees from resident activity.
North Carolina has passed a bill recognising CFTC preemption over prediction markets and imposing a 6% tax on net trading fee revenue attributable to state residents, according to The Block.
Why It Matters
The law establishes a clear — if contested — jurisdictional framework: federal CFTC authority governs prediction market operations, while North Carolina carves out a direct revenue claim at the platform level. For operators such as Kalshi and Polymarket, which have expanded U.S. retail access since the CFTC's posture softened in 2024–2025, a state-level gross-revenue tax creates a new compliance cost that could influence pricing or market availability. The 6% rate applies only to fees traceable to North Carolina users, meaning operators must build or refine geo-attribution systems. Other states watching prediction market growth may use North Carolina's model as a legislative template.
Context
Prediction markets occupy a regulatory grey zone: the CFTC classifies certain event contracts as derivatives, which historically placed them beyond state gambling law. North Carolina's explicit acknowledgement of CFTC preemption is notable because it accepts federal primacy while still asserting a taxing right — a dual-track approach not previously codified at the state level in this sector. As of July 2026, no federal statute directly addresses state taxation of CFTC-regulated prediction markets, leaving the constitutional limits of this approach untested in court.
What's Next
Legal challenges from platform operators or industry groups remain the most likely near-term development. Operators have until the law takes effect to assess whether the compliance cost justifies continued access to North Carolina's user base.
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