North Carolina has published a finalised state budget, including an increase in online sports betting tax to 23% and a new 6% levy on prediction markets.
Legislative leaders thrashed out the 634-page fiscal plan over the weekend of 27 and 28 June, finalising a blueprint after more than a year of negotiations between the chambers.
As part of the $34bn (£25.7bn) spending plan, sports betting operators in the Tar Heel State will now be subject to a 23% tax rate, up from the 18% set when legalised online sports betting went live in March 2024.
The House and the Senate both produced differing versions of the state budget last year, with contentions around what the sports betting tax rate should be set at.
In May 2025, the Senate proposed upping it to 36%, while the House suggested retaining the 18% rate.
The new 23% levy, which would come into effect from 1 July if signed off, puts North Carolina just above the average online sports betting tax rate in the US.
The likes of Kansas (10%) and Kentucky (14.5%) continue to pull the average down, versus outliers at the other end of the spectrum such as New York (51%) and Illinois (up to 40%).
The budget also included a shift as to how the tax dollars will be spent in the state.
The $1m commitment to the North Carolina Youth Outdoor Engagement Commission remains in place, although a $300,000 pledge to various in-state collegiate athletic departments has been scrapped.
Instead, the athletic departments at the various colleges will be funded on a Class I or Class II basis, with funds distributed evenly within each sub-section.
A further 30% of the take, not exceeding $30m will go to the North Carolina Major Events, Games and Attractions Fund. Any remaining tax take will be funnelled to the General Fund.
Prediction markets are also set to be taxed 6% on their “net trading fee revenue apportionable to the State”.
The budget reads: “A prediction market registered and licensed by the Commodity Futures Trading Commission that offers event contracts, including sporting event contracts, to North Carolina residents may operate within the State lawfully as a result of its registration with the Commission and its compliance with the Commodity Exchange Act and its implementing regulations, which establish exclusive federal regulatory authority of the Commission over prediction markets.
“This tax does not impose any licence, registration or other regulatory requirements or obligations of any kind on prediction markets.”
The levy will come into effect on 1 January 2027.
In April, Kentucky enacted a 14.25% tax on prediction markets’ transaction fees, although this has faced legal pushback from the platforms offering event contracts.
Kalshi has also launched legal proceedings against the state of Illinois, where lawmakers are proposing a 1.75% tax on the first five million trades placed on a prediction market.
The rate would then hit 3.5% for additional trades. A $15m licence fee has also been proposed.
The per-trade tax would match the structure online sports operators must adhere to, as they pay $0.25 excise on every sports bet for the first 20 million bets.
This increases to $0.50 for every wager after that.
The North Carolina House and Senate are expected to vote on the budget on Wednesday, 1 July and Thursday, 2 July.
The document must then be signed by Governor Josh Stein to take effect.
Phil Berger, North Carolina Senate leader, said: “Our state’s fiscal health remains in great shape. This is a responsible spending plan that takes aim at bureaucratic bloat without endangering core services.
“This keeps our promise to reduce the tax burden for all North Carolinians, while expanding access to incredible educational opportunities, keeping our communities safe and solidifying North Carolina’s status as the best state in the nation.”
The post North Carolina agrees new 23% OSB tax and proposes 6% prediction markets levy first appeared on EGR Intel.
Lawmakers in the Tar Heel State reveal plans for five percentage point hike for sports betting operators and a new net trading fee for event contracts in latest budget
The post North Carolina agrees new 23% OSB tax and proposes 6% prediction markets levy first appeared on EGR Intel.