North Carolina Becomes the First State to Write Prediction Markets Into Law

North Carolina has now formally recognized that CFTC-registered prediction market platforms can operate in the state, making it the first state to put that position in writing. For PSPs, acquiring banks, and payment teams serving high-risk flows, the detail that matters is simple: the state drew a legal line between event markets and sports betting, then taxed them differently.

1. Gov. Josh Stein signed a state budget measure that says prediction market platforms registered and licensed by the CFTC may operate in North Carolina under the Commodity Exchange Act’s “exclusive federal regulatory authority” over event markets.
2. The law imposes a 6% tax on operators’ net trading fee revenue attributable to North Carolina residents, but it also says that tax creates no licensing, registration, or other regulatory obligations. In other words, the state wants the revenue cut without pretending it is the regulator.
3. The same measure raised North Carolina’s sports-betting tax from 18% to 23%, which makes the 6% prediction-market tax look even more deliberate. The statute is effectively saying these are not the same business, even if state gambling authorities would prefer to treat them that way.
4. That distinction matters because, according to Decrypt, more than a dozen states have challenged prediction market platforms over markets tied to sporting events. The CFTC has sued nine of those states, arguing that event contracts fall under its exclusive authority over swaps, while the platforms themselves have sued several states for interfering with federally licensed operations.
5. Kentucky previously imposed a 14.5% tax on prediction-market platforms and sued Kalshi and Polymarket for allegedly operating illegal sports books in the state. The CFTC then brought a lawsuit against Kentucky in June, underscoring that the fight is now as much about jurisdiction as it is about wagering.

By some estimates, wagering on sporting events makes up as much as 80% of trading value on these platforms, which is exactly why states keep treating them like sports books. The platforms and the CFTC keep saying the opposite: that sports-linked event contracts are no different, in regulatory terms, from traditional swaps traded on CFTC-licensed derivative exchanges.