North Carolina Governor Enacts Budget Bill Raising Sports Betting Taxes and Authorizing Prediction Market Levies

North Carolina Gov. Josh Stein signed the state’s $34 billion fiscal year 2026 budget bill known as SB 257 on a date that sets new tax structures for the gambling sector into motion ahead of July 2026 when the fiscal period begins, and the legislation increases the online sports betting operator tax rate from 18 percent to 23 percent on gross wagering revenue while adding a 6 percent tax on net trading fee revenue from prediction market operators.

This measure positions the state as the first to explicitly authorize and tax prediction markets through a dedicated framework rather than relying on indirect approaches seen elsewhere, and observers note the changes target revenue generation from an expanding industry that includes both traditional sports betting platforms and newer prediction-based offerings.

Details of the Signed Legislation

SB 257 outlines the fiscal year 2026 budget provisions that adjust existing sports betting taxes and establish fresh requirements for prediction market participants, and the bill text available through official legislative channels shows how these rates apply directly to gross wagering revenue for sports betting operators alongside the new levy on prediction market fees.

State officials have confirmed the bill integrates these tax adjustments into broader revenue planning, while the prediction market component marks a distinct step because prior state approaches elsewhere often applied general taxes without creating specific licensing or authorization pathways tied to this activity.

Tax Rate Adjustments Explained

The increase from 18 percent to 23 percent applies to gross wagering revenue generated by online sports betting operators, and this shift builds on the structure already in place by raising the percentage collected by the state on each dollar wagered through licensed platforms. Prediction market operators now face the additional 6 percent tax calculated on net trading fee revenue, which covers fees earned from user trades on event outcomes rather than direct wagers.

Those familiar with regulatory patterns across states point out that North Carolina becomes the initial jurisdiction to combine explicit authorization of prediction markets with a tailored tax rate, whereas other locations have imposed taxes on similar activities without granting full operational licensing. The combined effect aims to capture a larger share of proceeds from both established sports betting and emerging prediction formats as participation grows.

Context Around Prediction Market Authorization

Prediction markets operate by allowing participants to trade contracts on the likelihood of specific events occurring, and the new provisions in SB 257 grant explicit state recognition for these platforms while imposing the 6 percent fee on their net trading revenues. This approach differs from states that have taxed prediction market activity under broader gambling statutes without dedicated authorization language.

Legislative records indicate the authorization component ensures operators meet defined standards before conducting business, and the tax applies once those operations commence under the new rules. Data from industry tracking shows prediction markets have expanded in various regions, prompting states to consider targeted frameworks that address both oversight and revenue collection simultaneously.

Revenue Generation Objectives

The budget bill incorporates these tax modifications as part of efforts to increase state income from the gambling sector, and projections tied to the legislation estimate additional funds flowing into state coffers once the higher rates and new prediction market tax take effect in fiscal year 2026. Officials have referenced the growing scale of sports betting and related activities as the basis for these adjustments, with the changes designed to align collections more closely with current market volumes.

According to the bill provisions, revenue from both the elevated sports betting tax and the prediction market levy will support general state expenditures outlined in the $34 billion budget. Those reviewing the measure note it avoids creating separate licensing regimes for prediction markets beyond the tax authorization, which distinguishes it from more comprehensive regulatory models in other jurisdictions.

Implementation Timeline and Scope

The signed legislation sets the updated tax rates to apply starting with fiscal year 2026, which begins in July 2026, and operators receive advance notice through the budget enactment process to prepare compliance systems. Sports betting platforms currently licensed in North Carolina will see their tax obligation rise to 23 percent on gross wagering revenue, while prediction market entities gain authorization to operate under the 6 percent net trading fee structure.

SB 257 limits its scope to these tax and authorization elements without introducing new consumer protections or operational restrictions beyond revenue collection, and the bill text clarifies how gross wagering revenue and net trading fees are defined for tax purposes. State agencies responsible for gambling oversight will administer the collections once the fiscal year commences.

Conclusion

The enactment of SB 257 establishes North Carolina as the first state to pair explicit prediction market authorization with a specific tax rate while simultaneously raising the sports betting operator levy, and these provisions integrate directly into the fiscal year 2026 budget framework. The adjustments reflect ongoing state efforts to derive revenue from expanding gambling activities through updated rate structures applied to both gross wagering and trading fee calculations. Senate Bill 257 serves as the primary legislative vehicle for these changes, which take effect as the new fiscal period opens.