North Carolina recognizes CFTC oversight for prediction markets in budget law

Traders Union
All News
Crypto
NC recognizes CFTC prediction markets

Highlights

North Carolina's Senate Bill 257, signed by Governor Josh Stein, recognizes exclusive CFTC jurisdiction over prediction market platforms under the Commodity Exchange Act.
North Carolina will impose a 6% tax on net trading fee revenue from prediction markets starting January 1, 2027, while raising the sports betting tax from 18% to 23%.
North Carolina's regulatory approach diverges from states like Kentucky and Illinois, offering a lighter framework and explicitly allowing CFTC-registered platforms such as Polymarket and Kalshi to operate.

Budget measure sets federal framework

As reported by The Block, Governor Josh Stein signed Senate Bill 257 as part of North Carolina's 2026 budget bill, and the law expressly recognizes the Commodity Exchange Act as giving the CFTC exclusive federal regulatory authority over prediction markets.

The measure says registration with the Commodity Futures Trading Commission allows prediction market platforms such as Polymarket and Kalshi to operate lawfully in North Carolina. That position separates the state from others that are seeking to apply state gambling regulation and licensing rules, particularly to sports-related event contracts.

Those efforts are already feeding litigation across the sector. Earlier this week, a federal judge denied Kalshi's preliminary injunction request to stop New York regulators from enforcing gambling laws against the platform, and Kalshi has since appealed to the Second Circuit.

Tax gap widens with sports betting

North Carolina's law also creates a lighter tax framework for prediction markets than for sports betting operators. The state sets a 6% tax on net trading fee revenue attributable to North Carolina residents, effective Jan. 1, 2027, while raising the sports betting tax to 23% on gross wagering revenue from 18%.

That approach is softer than measures pursued elsewhere. Kentucky's legislature passed a bill requiring prediction market platforms to pay 14.25% of transaction fees, prompting a CFTC complaint against the state, while Illinois places prediction markets inside its sports wagering tax and licensing regime with a tiered exchange-wager tax of 1.75% on the first 5 million wagers in the fiscal year and 3.5% thereafter.

Sports law attorney Daniel Wallach says the recent New York ruling is likely to weigh negatively on Kalshi's broader legal fight with other states. Even so, North Carolina's framework signals that some states are choosing to accommodate federally supervised prediction markets instead of treating them like conventional betting operators.

Our earlier report on Kalshi prediction markets tracked how traders were pricing the Federal Reserve’s uncertain interest-rate path through 2026 and into 2027. It highlighted a roughly 54% market-implied chance of a rate hike and expectations that policy could stay tight, showing how prediction markets are increasingly used to gauge outcomes tied to major U.S. institutions.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.