North Carolina Enacts Prediction Market Law, Nevada Moves to Oppose It.
This year, most states have taken a confrontational route against prediction markets, but North Carolina chose a different path: it taxed Kalshi instead of suing. Now, Nevada argues that accepting this deal was a mistake, and what seemed like a minor move could become a serious liability for Kalshi especially as other states watch closely.
The Deal
On July 7, Governor Josh Stein signed North Carolina’s budget, which included a 6% tax on prediction market revenue starting in 2027. Unlike sports betting operators, which face an 18-23% tax, prediction market operators like Kalshi were not required to get a state license. Instead, North Carolina relied on federal authority, explicitly recognizing CFTC-registered prediction markets as lawful without additional licensing.
Kalshi’s filings show they viewed this as a workable model one that other states could follow arguing that federal jurisdiction “prevents states from regulating on-DCM trading, but it does not preclude states from imposing lawful taxes.”
Nevada’s Response
Nevada fought back earlier this year, with a judge ruling against Kalshi in March. After Kalshi appealed, the Ninth Circuit allowed Nevada’s ban to stay in place. Now, Nevada’s Deputy Attorney General Abigail Pace has filed a brief, directly referencing North Carolina’s approach. She calls it “a stunning about-face,” arguing that taxation and regulation are just different forms of state control. If true, then Kalshi can’t claim Nevada has no authority to tax or regulate.
Kalshi has yet to respond publicly, but the case’s outcome could threaten their broader legal strategy, which hinges on the idea that federal law preempts state regulation.
The Legal Fight
Kalshi’s main defense is that the CFTC has exclusive authority over event contracts, and states can’t regulate them. But accepting North Carolina’s tax without fighting it weakens that argument. Nevada’s strategy is to show that “paying a tax” is effectively the same as “regulating,” which could undermine Kalshi’s entire preemption claim.
Read Also: North Carolina Enacts Prediction Markets Tax and Boosts Sports Betting Tax Rates
Why North Carolina Chose a Softer Approach
Other states, like Pennsylvania, tried taxing prediction markets but faced legal hurdles. North Carolina avoided this by not tying the tax to licensing requirements, sidestepping the preemption fight. Nevada is now trying to replicate that strategy in court.
Kalshi didn’t have to accept North Carolina’s tax. It chose the easier route likely to save time and money believing that a 6% tax wouldn’t affect its operations elsewhere. Nevada’s move now challenges that assumption.
If Nevada’s argument succeeds, the irony is clear: the one state where Kalshi compromised could be the case that breaks its broader legal position and the blueprint for other states’ regulation efforts.
