North Carolina Raises Sports Betting Tax, Adds Prediction Market Levy

North Carolina is taking a bold step in its gambling tax policy. A new law, signed by Governor Josh Stein, will increase the taxation of sports betting and introduce a levy on so-called prediction markets starting January 1, 2027. These markets, which allow bets on future events, are increasingly coming under the scrutiny of states.

The state of North Carolina's budget amounts to $34 billion. A portion of these revenues is expected to be generated through the adjusted gambling taxes. It remains to be seen what impact these changes will have on the market and operators.

Numbers and facts

The sports betting gross wagering revenue tax in North Carolina will increase from the current 18 percent to 23 percent. This represents a significant rise. Simultaneously, a new six percent tax will be imposed on the net trading revenue of prediction market operators. These operators include companies like Kalshi. These relatively new regulations will come into effect at the beginning of 2027. A notable aspect in North Carolina is that the legislation does not provide for state licensing or a regulatory framework for prediction markets. This distinguishes the state from others like Kentucky and Illinois, which have introduced additional regulatory requirements.

Background

North Carolina's decision to tax prediction markets without a comprehensive regulatory framework could lead to legal challenges. The Commodity Futures Trading Commission (CFTC) has already filed lawsuits against Kentucky and Illinois over their prediction market laws. The CFTC argues that these measures unlawfully attempt to regulate federally overseen derivatives markets. Kalshi itself has challenged Illinois' tax regime in federal court.

In contrast to these states, which have sought to restrict or prohibit sports event contracts, North Carolina acknowledges the legality of federally regulated prediction markets. At the same time, the state seeks to generate revenue from their operations. Brad Senkiw from Covers emphasized the impact of the tax increase on operators: > "North Carolina is increasing the tax on online sportsbook revenue from 18% to 23%. Prediction markets will be taxed 6% but allowed to operate without a specific license." - Brad Senkiw, Covers

The increase in sports betting tax in North Carolina is part of a national trend in the US. Many states, including New Jersey, Maryland, and Louisiana, have raised their sports betting taxes in recent years. Illinois has been particularly aggressive, introducing a progressive tax system in 2024, followed by a per-wager tax in 2025. This approach shows that states are trying to derive additional revenue from the rapidly growing gambling industry. FanDuel expressed concern about the impact of such an increase on financial support for collegiate athletic departments: > "Legal sports betting is generating real revenue for collegiate athletic departments across the state. A tax hike would threaten that funding and hit fans." - FanDuel, in an electronic letter to customers

Despite operators' concerns, states are pushing these measures forward. North Carolina is thereby seeking to maximize revenue.

Why it matters for German players

For German players, these specific tax changes in North Carolina have no direct impact. The German market is governed by the Interstate Treaty on Gambling 2021 (GlüStV 2021), which provides a strict legal framework. This treaty regulates online gambling at a nationwide level and aims to ensure player protection and addiction prevention.

This includes measures such as the 1 Euro per spin betting limit and a monthly deposit limit of 1,000 Euros for all players via the central supervisory authority LUGAS. German players should exclusively use providers listed on the so-called GGL whitelist, as these have a valid German license. Providers holding only an MGA or Curacao license are illegal in Germany and do not offer a secure legal framework or protection under GlüStV 2021. The regulations in the USA, particularly the taxation of prediction markets, are an example of how states seek to open up new revenue streams. In Germany, the legislator strives to strictly regulate the entire market.

What it means for GGL-licensed casinos

GGL-licensed casinos in Germany operate under a very clear and strict regulatory framework of GlüStV 2021. They are obliged to comply with the stringent rules of the Joint Gambling Authority of the Federal States (GGL). This includes adherence to the 1,000 Euro monthly deposit limit and the 1 Euro per round betting limit for slot games. Connection to LUGAS, a cross-player limit and OASIS exclusion system, is also mandatory. Special taxes on prediction markets or similar products, as introduced in North Carolina, are currently not an issue for GGL casinos in Germany. German legislation focuses on taxing Gross Gaming Revenue (GGR) for online slots, online poker, and sports betting. This amounts to five percent of stakes. While the level of taxation in the US often serves to create competitiveness among states and maximize revenue, in Germany, player protection is paramount in regulation.