North Carolina Budget Adds Tax on Prediction Markets

The new North Carolina state budget includes not only a sports betting tax increase but also a tax on prediction markets. 

The bill, SB 257, has been sent to Governor Josh Stein, and it increases the sports betting tax from 18% to 23% and adds a 6% tax on prediction market operators' net revenues.

The $34 million budget passed by votes of 35-10 in the Senate and 88-21 in the House. 

One thing that came up during the budget discussions was the impact of prediction markets on sports betting revenue, as a lower tax could lead sports betting operators to offer prediction-market products. 

“The revenue that we’ve been getting from sports betting, it’s going to plummet,” said Sen. Julie Mayfield to reporters. “… And then that has all sorts of implications. Not just for our budget, but for the schools that have again come to rely on this money for their athletic programs.”

Lawmakers Discussed Prediction Market Growth

North Carolina has seen prediction markets impact its tax revenue, though. For example, Underdog offered sports betting in the state, but pivoted to predictions last December, thus leaving the state. 

In North Carolina, they're not really concerned with regulating prediction markets at the moment; instead, they're just taxing them. 

“It's pretty clear that it's something that seems to be growing both in popularity and in terms of just recognition that it's out there,” Senate leader Phil Berger told reporters Thursday. “Whether it's something that eventually is going to take over from the sports betting, I don't know.”

North Carolina joins Kentucky, Minnesota, and Illinois as states that have passed legislation taxing them. 

Sports Betting Tax Revenue Distribution Changes

Since the 2024 launch of sports betting, the state has brought in about $287 million in taxes. That money had been split between the general fund and the UNC school system, but it didn't include the bigger schools. Now, with the new language, they can receive up to $5.8 million per year. 

Finally, another law was passed last month: SB 595. This required operators to report any players who won more than $2,000, and those winnings are taxed at a 4.5% rate.