North Carolina SB 257 Raises Sports Betting Tax

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Mon Jul 06, 2026, 8:00 am ET

Read Time: 5 minutes

North Carolina SB 257 Raises Sports Betting Tax

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North Carolina lawmakers have approved Senate Bill 257 (SB 257), a sweeping state budget that would reshape the state's gambling tax landscape if it becomes law. Alongside broader spending measures, the bill proposes higher taxes for licensed operators while introducing a new tax framework for federally regulated prediction markets.

The proposal arrives as states continue to debate how to regulate emerging event contract platforms. Instead of prohibiting those platforms, North Carolina has chosen a different path by recognizing their federal oversight while seeking to generate tax revenue.

At the same time, the legislation would increase the tax burden on US online sportsbooks, making it one of the most significant North Carolina gambling developments this year.

SB 257 Introduces Major Gambling Tax Changes

SB 257 contains several provisions affecting the state's regulated gambling industry.

Most notably, the legislation raises the tax rate for licensed online sportsbooks from 18% to 23%. The increase would make North Carolina one of the higher-taxed sports betting markets in the country.

The budget also creates a 6% tax on the net trading fee revenue generated by federally regulated prediction market operators. The tax would take effect on January 1, 2027.

Additionally, the measure allows bettors to deduct gambling losses against gambling winnings for North Carolina income tax purposes. 

It also revises how sports betting tax revenue will be distributed. SB 257 seeks to direct more funding toward collegiate athletics and sports-related initiatives across the state.

SB 257 Recognizes Prediction Markets while Imposing New Tax on Them

Perhaps the most notable gambling provision concerns federally regulated prediction markets.

Rather than requiring operators regulated by the Commodity Futures Trading Commission (CFTC) to obtain a separate state sports betting license, SB 257 acknowledges their ability to operate under federal oversight. 

However, those companies would still pay a 6% tax on their net trading fee revenue earned from North Carolina customers.

This approach differs from several other states that have challenged prediction market operators through cease-and-desist orders or lawsuits.

Instead, North Carolina would become one of the first states to establish a dedicated tax structure without attempting to directly regulate federally supervised platforms.

Reports noted that the proposal reflects a growing effort by states to capture revenue from prediction markets. It also recognizes the ongoing jurisdictional debate between state gaming regulators and the CFTC.

Licensed Online Sportsbooks Would Face A Higher Tax Burden

While prediction markets would pay a 6% tax on trading fees, licensed US online sportsbooks would see a much steeper increase.

SB 257 raises the state's sports betting tax rate from 18% to 23%. This imposes additional costs for operators that already comply with North Carolina's licensing and regulatory requirements.

Industry stakeholders have questioned the disparity between the two tax structures. Some argue licensed sportsbooks face significantly higher compliance obligations than federally regulated prediction market platforms.

Supporters of the budget, however, contend the higher sportsbook tax will generate additional revenue for public programs without altering the state's regulated sports betting framework.

The revised revenue allocation would also direct more funding toward the following:

  • athletic departments at public universities
  • youth sports initiatives
  • major sporting events hosted within the state

What Happens Next for SB 257?

Having passed both legislative chambers, SB 257 now heads to Governor Josh Stein for consideration. The House approved the budget on third reading by an 88-21 vote. This sent the measure to the governor for final action.

Although the bill received bipartisan support, several lawmakers voiced concerns about its gambling provisions. Democratic Rep. Pricey Harrison, who voted against the budget, argued that the new prediction market tax could weaken the state's regulatory authority over sports wagering.

During the House debate, Harrison said the provision "seems to undermine our ability to govern and regulate sports gambling." She added that it "seems to harm tribal casinos and legal sports betting, and it seems to give them some veracity in our state."

Harrison also questioned the different tax treatment between licensed sportsbooks and prediction market operators. She noted that the budget raises the legal sports betting tax rate to 23% while imposing only a 6% tax on prediction market trading fee revenue. 

Furthermore, she expressed concern that the legislation could be "conceding the power to the Commodity Futures Trading Commission" even as prediction markets remain "in highly contentious litigation."

Governor Stein Faces Final Decision on SB 257

If Governor Stein signs the measure, the new sportsbook tax rate would take effect under the budget's implementation schedule. Meanwhile, the prediction market tax would begin on January 1, 2027.

Should the legislation become law, licensed operators will likely reassess their financial strategies as higher tax obligations reduce operating margins.

 Although North Carolina would remain an attractive regulated market, operators may need to adjust promotional spending and customer acquisition efforts to offset increased costs.

Meanwhile, the state's decision to tax rather than prohibit federally regulated prediction markets could influence future policy discussions nationwide. 

Other jurisdictions are closely watching how states balance traditional sports betting regulation with the growing presence of event contract platforms.

Ultimately, SB 257 positions North Carolina at the center of the evolving debate over gambling regulation. If enacted, the legislation would reshape the competitive landscape for US online sportsbooks. 

It will also establish a distinct framework for prediction markets, marking a significant milestone for North Carolina gambling policy.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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