North Carolina Prediction Markets: The First State to Write CFTC Supremacy Into Law

The state now runs two parallel systems side by side: heavily taxed, heavily regulated sportsbooks on one track, and lightly taxed, federally regulated prediction markets on the other. That contrast — a 23 percent rate on the bookmaker down the street and a 6 percent rate on the event-contract exchange — is the tension that will define North Carolina’s prediction-market story for years. What follows is the most detailed breakdown of exactly where that leaves a North Carolina trader: the law by its bill number, the votes and dates, the tax mechanics, and the platforms that serve the state.

Yes — and North Carolina is now the clearest “yes” in the country. As of August 2, 2026, state law affirmatively recognizes CFTC-registered prediction markets as lawful operators, which puts North Carolina in a category of one. Most states where these apps run are simply silent; the platforms operate by default because nothing stops them. North Carolina went further and said so out loud, in a statute the governor signed.

The vehicle was Senate Bill 257, the Current Operations Appropriations Act, enacted as Session Law 2026-41. Buried in that budget is language providing that because the federal Commodity Exchange Act gives the CFTC exclusive regulatory authority over event-contract platforms, a prediction market that is registered and licensed by the CFTC and that complies with federal law “may operate lawfully” in North Carolina — with no state license, no state registration, and no separate regulatory approval required. That is the entire theory the industry has been arguing in courtrooms from Trenton to Las Vegas, except here a state legislature adopted it voluntarily and put it in its own code.

Understanding why this matters requires understanding the argument these platforms make everywhere else. An operator like Kalshi registers with the CFTC as a Designated Contract Market, the same federal category that lists commodity futures, and treats each yes-or-no event contract as a swap governed by federal commodities law. If that characterization holds, Washington controls the product and state gambling codes are pushed aside for those contracts. Elsewhere, that theory is contested — a New York judge rejected it, an Arizona judge accepted it, and a federal appeals panel in Nevada is still deciding. North Carolina removed the contest inside its own borders by writing the platforms’ preferred answer into law.

Prediction markets did not get their own debate in North Carolina. They rode in on the biennial budget — Senate Bill 257, formally the Current Operations Appropriations Act, a roughly $34 billion spending package covering the 2025-2027 fiscal biennium. The General Assembly passed it on July 2, 2026, the House voting 88-21 and the Senate 35-10, and Governor Stein signed it on July 7. You can pull the full text and vote history through the North Carolina General Assembly’s bill page for S 257 and read the ratified language in the Session Law 2026-41 PDF.

It is worth being precise about what the state gave up and what it kept. By declining to impose licensing or registration, North Carolina surrendered the tools it uses on its sportsbooks — background checks, sports-integrity agreements, responsible-gambling mandates, advertising rules. What it kept was the money. The design is closer to a toll than a permit: pay the state its 6 percent cut of North Carolina fee revenue, and operate under your federal license otherwise untouched. Fiscal analysts projected the tax would raise only about $1 million in its first year, a rounding error against a $34 billion budget — which underscores that revenue was the rationale but not the windfall.

That restraint reads differently once you notice what North Carolina did on the other side of the ledger in the very same bill. The budget raised the tax on the state’s licensed online sportsbooks from 18 percent to 23 percent, one of the higher rates in the nation, above Massachusetts, Ohio and New Jersey. Both FanDuel and DraftKings, which hold North Carolina sportsbook licenses, opposed the increase. So the single piece of legislation that welcomed federally regulated event-contract exchanges at 6 percent simultaneously squeezed the state’s own licensed bookmakers harder.

North Carolina now taxes two products that let a resident put money on a football game, and it taxes them at wildly different rates through different mechanisms. A licensed sportsbook pays 23 percent of its gross gaming revenue — essentially its net win after paying out bettors. A prediction-market operator pays 6 percent, and not of its winnings but of its trading-fee revenue apportionable to the state, meaning the commissions it collects for matching North Carolina traders against one another.

Apportionment is the technical heart of the levy, and it is drawn narrowly. The 6 percent applies to fee revenue tied to event-contract trading by residents who are domiciled in North Carolina and physically present in the state at the moment of the trade. That geolocation-based apportionment mirrors how the state already sources sports-betting activity. The clock starts January 1, 2027; trades before that date are not reached by the tax even though they are already lawful.

Set North Carolina’s approach beside the other states that chose taxation over prohibition and the philosophy stands out. Kentucky enacted a far heavier 14.25 percent excise that reaches both operator fees and the amounts consumers put in — a broad base operators are challenging in court on preemption grounds. Illinois wrote a licensing-and-fee regime into its budget with a reported $15 million license charge and tiered transaction taxes. North Carolina did none of that. It picked the lightest touch of the taxing states: a single low rate, a narrow base of net fees, and an explicit promise of no licensing strings. Where Kentucky’s tax functions as friction and Illinois’s functions as a gate, North Carolina’s functions as an invitation with a modest cover charge.

The predictable consequence is a cost gap that favors event contracts. An operator paying 6 percent on fees can, in principle, offer a North Carolina resident a cheaper way to bet on a game than a sportsbook paying 23 percent on its win — precisely the dynamic that has sports-betting operators and some leagues warning that prediction markets enjoy a regulatory and tax advantage they never had to earn. North Carolina did not create that national argument, but by legislating both rates in one budget, it made itself the clearest case study for it.

To appreciate how unusual North Carolina’s posture is, look at the company it declined to keep. The CFTC spent the first half of 2026 suing state regulators to protect operators, and by August 2 its target list ran to nine states: Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island, Wisconsin and Kentucky. Those are the states that picked fights. North Carolina is nowhere on that list, and it never will be for the simple reason that there is nothing to sue over — the state agreed with the CFTC’s position before the CFTC ever had to assert it.

The national legal picture that North Carolina sidestepped is genuinely unresolved. On April 6, 2026, the Third Circuit handed the industry its biggest win in KalshiEX LLC v. Flaherty, No. 25-1922, ruling 2-1 that sports event contracts are swaps and that federal law preempts New Jersey’s gambling statutes as applied to them. Pulling the other direction, the Ninth Circuit heard consolidated appeals out of Nevada on April 16, 2026 — matters involving Kalshi, Robinhood and Crypto.com’s Nadex — and as of August 2, 2026 has not ruled, with a decision for Nevada likely to create a direct circuit split and send the whole question to the Supreme Court. North Carolina wrote its law knowing all of this and effectively bet on the industry’s side of the split.

Why would a state volunteer to give up regulatory control? The most credible reading is pragmatic on three fronts. First, the platforms were already serving North Carolinians under federal registration, so a ban would have meant a lawsuit the state might lose. Second, taxing an activity the state could not easily stop converts a legal headache into revenue. Third, North Carolina had just built a licensed sports-betting market it was busy taxing at 23 percent, and picking a separate war over a smaller federal product offered little political payoff. Codifying the CFTC’s authority was, in that light, less an ideological embrace than a calculated decision to collect rather than combat.

The reason North Carolina could plausibly treat these products as federal instruments rather than bets starts with how differently they behave from a sportsbook. A traditional bookmaker sets a line, takes the opposite side of your wager, and profits when you lose — the house is your adversary. An event-contract exchange does neither. It runs an order book and pairs you with another trader who holds the opposite view, collecting a small fee on the match rather than betting against you. The venue is a marketplace, not a counterparty, and that structural fact is exactly what North Carolina’s statute leaned on when it deferred to federal commodities regulation.

Each is a clean yes-or-no proposition that pays a dollar if it happens and nothing if it does not. “Will the Carolina Panthers win Sunday?” might trade at 47 cents, and that price doubles as an implied probability — 47 cents means the market puts the outcome around 47 percent. Buy yes at 47 cents and a Panthers win pays you a full dollar for a 53-cent profit; a loss costs you the 47 cents. You can also take the no side, or close out before the game ends by trading your position at the current price, a flexibility a fixed sportsbook ticket rarely offers cleanly.

Settlement runs on rules, not talks. As soon as the event resolves, the platform grades every contract against a defined outcome source and credits winners automatically. For a North Carolina resident the sign-up path is ordinary: download a CFTC-registered app, verify your identity, link a bank account or card, and fund in dollars. Most platforms set the minimum age at 18 — notably below the 21 the state requires for its licensed mobile sportsbooks — and none of them file anything with a North Carolina agency, because under Session Law 2026-41 they no longer have to.

The menu reaches far past football, though sports is what drives the volume and most of the sign-ups. A North Carolina trader will generally find five families of markets.

North Carolina imposes no state-specific ban on which of these categories a resident may trade — having declined to regulate the platforms, it does not regulate their menus. The only limits are the ones each operator writes into its own rulebook and whatever the CFTC’s evolving federal contract-review process eventually carves out, such as the agency’s proposed restrictions on contracts tied to individual player injuries or referee decisions.

Because North Carolina affirmatively welcomes CFTC-registered operators, the state generally receives the national lineup. There is one genuinely state-specific wrinkle, though, and it is the opposite of what you would expect: because North Carolina has a licensed online sports-betting market, the most compliance-conscious operators may withhold their sports contracts here even as the law invites them in. Treat the table below as a verified-August-2-2026 snapshot and confirm any platform’s current North Carolina availability and market list before funding an account, since operators redraw their state maps without notice.

The prediction markets hub lays out each operator closely. The names that matter most to a North Carolina resident get a closer look here.

North Carolina is one of the few states where a resident genuinely has both options side by side, which makes the comparison concrete rather than theoretical. Since March 11, 2024, the state has run a licensed online sportsbook market under the North Carolina State Lottery Commission, launched with eight operators — bet365, BetMGM, Caesars, DraftKings, Fanatics, FanDuel, ESPN BET and Underdog — and it has generated more than $300 million in tax revenue since. So unlike a resident of Georgia or Texas, a North Carolinian choosing an event contract is choosing it over a fully legal, state-regulated alternative that already exists.

One is a bet against the house inside a state safety net; the other is a wager matched against other traders outside it. And there is the money angle North Carolina itself created: the 23 percent tax on sportsbooks versus the 6 percent tax on prediction markets means the two products do not compete on a level field, which is part of why some operators and leagues argue event contracts have an unearned edge. If you would rather bet at a licensed book, our North Carolina online sportsbooks page tracks the law, and the North Carolina gambling sites overview pulls the whole picture together. The national online gambling legality guide sets the broader frame.

Do not confuse the state’s 6 percent tax on operators with your own tax bill — they are separate. The 6 percent is what platforms owe North Carolina on their fee revenue; what you owe on your own gains is a different and murkier question. The exchange issues no 1099-B for this activity, and the IRS has stayed quiet, meaning traders must choose between reporting gains as gambling income, as capital gains or under Section 1256. Because a trade distributed through a brokerage like Robinhood can be recorded differently than one placed directly on the exchange, keep your own record of gains and losses and consult a tax professional. This is general information, not tax advice.

The same July 2026 budget did hand North Carolina bettors one favorable state-tax change worth knowing: it began letting gamblers deduct losses against winnings on their state income taxes, and it directed operators to report users who win more than $2,000 in a year to the Department of Revenue. How cleanly those provisions map onto event-contract gains, as opposed to sportsbook winnings, is exactly the kind of detail the unsettled federal classification muddies — another reason to get individualized advice.

Regionally, North Carolina is the outlier in the direction of openness. Tennessee, to the west, produced one of the most platform-friendly court rulings in the country when a federal judge treated sports event contracts as likely CFTC-regulated swaps, but it did not legislate a welcome the way North Carolina did. Virginia and South Carolina have taken no comparable step. Kentucky went the taxing route but with a heavier 14.25 percent levy that operators are fighting, and the CFTC has sued Kentucky. Against that map, North Carolina stands as the single state that paired an affirmative legal recognition with the lightest tax — the friendliest overall posture in the country as of August 2, 2026.

Several developments could still move the picture, and they are worth watching in a specific order:

• The Ninth Circuit ruling. A decision for Nevada in the consolidated appeal would split the federal circuits and likely push the swap-versus-bet question to the Supreme Court. A ruling that these contracts are not swaps would undercut the very premise North Carolina wrote into its budget, even though the state itself is not a party.
• The Supreme Court. If the justices ultimately hold that event contracts are unlicensed bets, that would override North Carolina’s recognition clause. North Carolina’s statute is durable only so long as the CFTC-swap theory survives.
• The CFTC’s contract-review rule. The agency’s proposed framework would let it approve or bar specific contract categories — potentially banning contracts on player injuries, referee calls and the like — which would quietly reshape what a North Carolinian can trade without any action in Raleigh.
• The January 1, 2027 tax start. The 6 percent levy has not yet taken effect. Watch whether operators absorb it, pass it to North Carolina traders through fees, or adjust their state footprint.
• Federal legislation. The bipartisan Prediction Markets Are Gambling Act, introduced March 23, 2026, would ban sports and casino-style contracts on CFTC exchanges outright. If it passed, it would override North Carolina’s welcome and every state fight at once. Its near-term odds are viewed as low.

• Senate Bill 257, Current Operations Appropriations Act, enacted as Session Law 2026-41 — North Carolina General Assembly bill page and ratified session-law text (PDF). Passed July 2, 2026 (House 88-21, Senate 35-10); signed by Governor Josh Stein July 7, 2026. Contains the CFTC-authority recognition, the 6 percent prediction-market tax effective January 1, 2027, and the sports-betting tax increase from 18 percent to 23 percent.
• North Carolina State Lottery Commission — regulator of the state’s licensed online sports betting, which launched March 11, 2024 with eight operators.
• U.S. Commodity Futures Trading Commission (cftc.gov) on event-contract oversight and Designated Contract Market registration.
• KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir., April 6, 2026), the Third Circuit’s 2-1 preemption ruling; consolidated Nevada appeals argued in the Ninth Circuit April 16, 2026, ruling pending as of August 2, 2026.
• Reporting on SB 257’s prediction-market provisions from Bloomberg Government, PYMNTS, Sports Betting Dime, Covers, the Washington Examiner and Holland and Knight, and on North Carolina’s comparative tax posture against Kentucky and Illinois.

North Carolina is the clearest “yes” in the country for prediction markets. Its legislature wrote CFTC supremacy into the state budget, taxed operators a light 6 percent, and asked for no state license — while raising its own sportsbooks to 23 percent in the same bill. A Tar Heel resident can open Kalshi, Polymarket, Robinhood, DraftKings Predictions and the rest today, trade real-money event contracts on sports, politics, economics and culture, and settle in dollars. The tradeoffs are real: an 18-and-over floor instead of 21, crowd-set prices instead of fixed odds, and a federal safety net far narrower than the Lottery Commission’s. Trade informed, keep your own records, and never wager more than you can afford to lose.