The state’s fresh budget makes operating a sportsbook pricier while giving a competing product a gentle landing, and a few legislators fear the imbalance could siphon off the very dollars the increase was supposed to bring in.
- A budget Josh Stein approved this week lifts the state’s online wagering tax to 23% of operator revenue, a jump from the 18% in place since betting began, and it applies at once
- That same law leans on prediction platforms, Polymarket and Kalshi among them, for only 6% of their fee income beginning in 2027, and asks them for no state license whatsoever
- Detractors say the lopsided rates hand operators an incentive to funnel customers toward the cheaper prediction venues, potentially hollowing out both state coffers and campus athletic budgets
- It is the first rate change since wagering opened in March 2024, and it lifts the state past Massachusetts, New Jersey, and Ohio
- Two other tweaks ride along: officials gain the power to audit a bettor’s individual wagering history, and players may now write off gambling losses on their state returns
In one budget, North Carolina made sportsbooks costlier to operate and, at the very same moment, gave a rival form of betting a far gentler bill. What is left is an uneven playing field that a handful of legislators fear could rebound on the state that drew it up.
The North Carolina Sports Betting Tax Just Jumped to 23%
On Tuesday, Josh Stein put his signature to a state spending plan worth about $34 billion, and folded into Senate Bill 257 sits a five-point bump for wagering operators. The state’s sportsbooks now surrender 23 cents of every revenue dollar, a rate that had held at 18 cents ever since the market opened, and the higher figure kicked in the moment the pen lifted. No increase had come along since North Carolina switched on legal mobile betting in March 2024, and the change lands on the handful of licensed books, Caesars, BetMGM, FanDuel, and DraftKings among them, that serve the state.
How North Carolina Got Here
The 23% landing spot was a truce, and a mild one next to what nearly happened. In the spring of 2025, senators pitched a rate of 36%, which would have vaulted the state into the nation’s five steepest flat betting levies. House members balked, and after a year-plus of haggling over a budget hole measured in the billions, the two chambers met at 23%. The final tally ran 88 to 21 in the House and 35 to 10 in the Senate. Even softened, the rate now outranks seasoned markets such as Ohio, Massachusetts, and New Jersey, and it falls on a business that has already routed north of $300 million to the state since it opened.
The Catch: Prediction Markets Pay Just 6%
Here is the twist that makes this more than a routine revenue story. The same law invents a charge on prediction markets, the CFTC-regulated venues such as Polymarket and Kalshi where people buy and sell contracts on real-world events, sports included. Once 2027 begins, those exchanges will owe the state 6% of the fees they collect on North Carolina trades, a small share beside what books pay. Yet unlike a sportsbook, none of them will need a state license or have to obey a single state gambling rule. Legislators opted to defer to the platforms’ federal supervision and simply cash a check, a clause sitting deep in a 634-page document that sailed through with barely any public airing. Analysts figure the charge will pull in roughly $2 million in year one, and it seats North Carolina beside Illinois and Kentucky among the states taxing the field.
Why That Gap Worries Some Lawmakers
The arithmetic is what unsettles the skeptics. A book in the state now pays 23% and shoulders the entire regulatory load, while an exchange taking action on the same games pays 6% and follows no state rulebook. That imbalance, critics contend, practically dares operators to push their customers toward prediction products and pocket the difference. “The revenue that we’ve been getting from sports betting, it’s going to plummet,” Democratic state Senator Julie Mayfield told WRAL, flagging the fallout for schools that count on the cash. Mick Mulvaney, once a White House chief of staff, blasted the soft treatment, arguing the state has no business favoring unlicensed operators over the regulated books that play by the rules and foot the bill. The Sports Betting Alliance, the sector’s leading trade group, would not comment.
Where the Money Goes
None of this is abstract, because the state assigns its betting money to specific pockets. The proceeds feed gambling-addiction treatment, youth athletics, public schools, the general fund, and a war chest for luring major events that the budget now caps at $30 million a year. College sports draw from it too, and the fresh budget rewrote that split so the marquee programs, North Carolina State and the University of North Carolina, finally share in dollars once reserved for schools with smaller athletic budgets. That is precisely why Mayfield’s caution bites: should betting drift toward a product taxed at 6%, the campus programs and public services leaning on sports betting in North Carolina could watch the haul dwindle.
New Audit Powers, Too
A pair of quieter clauses should catch a bettor’s eye. The law arms state revenue staff with fresh authority to inspect a single customer’s betting history, an enforcement lever tied to a requirement that operators report anyone clearing $2,000 in winnings within a fiscal year. In the same stroke, it lets players in the state write off gambling losses on their state filings, an unusual gift at a moment when Washington has been tightening in the opposite direction. Read together, they paint a state determined to wring more from the market without chasing its bettors away.
What Happens Next
The 23% rate is live already; the charge on prediction markets sits idle until 2027, and the road there may get bumpy. Both Illinois and Kentucky drew lawsuits once they taxed the exchanges, and North Carolina could be pulled into the same tug-of-war between federal commodities law and state power. Until then, operators will size up whether a 23% market still earns its keep, and the whole industry will watch for any drift toward the cheaper, lightly policed option. For anyone following how individual states keep rewriting the terms across the U.S. gambling scene, North Carolina has essentially launched a live experiment: tax the familiar product heavily, the newcomer lightly, and see which way the dollars run.