North Carolina has a new state budget, and with it comes major changes for the state’s gambling industry. Gov. Josh Stein signed Senate Bill 257 into law Tuesday (July 7), approving the first full state budget North Carolina has passed in more than two years. While much of the attention centered on education, healthcare and public safety funding, the legislation also significantly changes how sports betting and prediction markets are taxed.

Announcing the budget, Stein pointed to investments across several key areas of state government while acknowledging lawmakers had found common ground to move the measure forward.

“North Carolinians expect their elected officials to come together across our differences to deliver for people,” Stein said in a statement announcing the budget’s signing. “This budget delivers the largest starting teacher pay raise in nearly 50 years and overall teacher pay raise in fifteen years, fully funds Medicaid for the year, and provides historic salary increases to public safety officers who sacrifice to keep our communities and prisons safe.”

North Carolina budget changes reshape gambling taxes landscape

One of the biggest gambling-related changes increases the state’s tax on licensed online sportsbooks from 18% to 23%. It is the first tax hike since legal online sports betting launched in North Carolina in 2024. As ReadWrite previously reported, lawmakers approved the higher rate as part of a wider effort to revise gambling taxes, generate additional state revenue and change how betting tax proceeds are allocated.

The budget also introduces a 6% tax on the net trading fee revenue earned by federally regulated prediction market operators. It marks the first time North Carolina has specifically taxed platforms offering event contracts. As we also wrote, the measure does not create a state licensing or regulatory system for those companies. Instead, it applies only to operators already overseen by the federal Commodity Futures Trading Commission.

This places North Carolina among the first states to directly tax prediction markets as lawmakers respond to the industry’s growth. The platforms offer contracts tied to sporting events, elections and other real-world outcomes. Unlike licensed sportsbooks, however, prediction market operators will continue operating without additional state regulatory requirements under the new budget.

The difference between the two tax rates has already sparked debate. Supporters say the state should collect revenue from an expanding industry that already falls under federal oversight. Critics argue the lower 6% rate, combined with the absence of state regulation, could give prediction market companies an advantage over licensed sportsbooks.

Stein said the budget was imperfect but concluded it deserved his signature.

“This budget has real flaws. It cuts vacant state government positions that are helping western North Carolina recover from Hurricane Helene and helping keep our air and water clean,” Stein said. “Despite these shortcomings, I am signing this budget because, on balance, it makes meaningful investments in North Carolina’s people.”

With Stein’s signature, the higher sportsbook tax will now take effect, while the new prediction market tax positions North Carolina among the first states to formally include federally regulated prediction market operators within its tax system.

Featured image: Screenshot of Governor Josh Stein via YouTube

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