North Carolina Enacts Prediction Markets Tax and Boosts Sports Betting Tax Rates
North Carolina has enacted significant changes to its gambling and betting regulations through the FY27 state budget, which Governor Josh Stein signed into law on Tuesday. Key among these changes are the introduction of a new prediction markets tax and an increase in the tax rate on online sports betting. North Carolina Tax Rates
Under the new budget, the sports wagering tax rate in North Carolina will rise from 18 percent to 23 percent, a move agreed upon in late June. The legislation also revises how the revenue from this tax is allocated. Starting July 1, the amount allocated to the North Carolina Major Events, Games, and Attractions Fund will be capped at $30 million annually. In addition, both North Carolina State University and the University of North Carolina at Chapel Hill are now designated as recipients of some of these revenue proceeds.
This redistribution is projected to generate an additional $50.7 million for the state’s General Fund in fiscal year 2027.
In addition to the sports betting tax adjustments, a new prediction markets tax will be levied at 6 percent of net trading fee revenue. Despite its recent implementation, this tax is expected to generate only about $1 million in FY27. This estimate is based on an anticipated trading volume of $2.16 billion within North Carolina this year, which would produce prediction market platforms trading fee revenue of roughly $28.3 million. However, promotional spending and incentives offered by these platforms are expected to reduce the taxable net trading fee revenue to approximately $21.2 million.
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The budget also introduces new provisions for gambling loss deductions. Taxpayers will be permitted to deduct gambling losses up to the extent allowable for federal tax purposes, including the option to retroactively claim losses dating back to tax year 2025 for those who itemize deductions.
These changes are projected to cost the state approximately $40.3 million in FY27, as taxpayers claim earlier losses. Over time, this deduction is expected to reduce general fund revenue by an estimated $19.7 million to $23.0 million annually. North Carolina Tax Rates
