North Carolina recognizes CFTC’s ‘exclusive’ authority over prediction markets

Following Governor Josh Stein’s decision to sign the new state budget into law on July 7, North Carolina became the first US state to recognize the Commodity Future Trading Commission (CFTC)’s "exclusive" authority over prediction market operators on July 7. 

Within a provision included in the state budget, a 6% tax will be imposed on the net trading revenue of federally regulated prediction market operators, significantly lower than the 23% currently enforced upon the gross wagering revenue of sports betting entities. 

The provision also acknowledges that operators registered with the CFTC are now legally eligible to conduct business in North Carolina under the Commodity Exchange Act. 

While states such as Kentucky previously enacted a 14.25% excise tax on prediction market transaction fees, regulators have yet to formally recognize the CFTC’s potential authority over such operations. 

Stein addressed the threat posed by prediction markets during May 2026, and even signed Executive Order No. 37 which prohibits state employees from using information they have obtained through their work to bet on prediction market contracts.

North Carolina Senator Jim Burgin confirmed plans for the state to increase its tax rate on sports betting revenue from 18% to 23% on June 22, projected to generate an additional $37m in tax revenue.

Speaking with local reporters, North Carolina House Speaker Destin Hall shared that lawmakers “want to be on the average of what other states are doing on a lot of these rates,” despite previously showing hesitance to “tweak too much a program that’s worked pretty well.”

The new rate places North Carolina ahead of states such as New Jersey, Ohio and Massachusetts, and was finalized prior to the government’s new fiscal year beginning on July 1.

How North Carolina’s decision affects the ongoing legal battles related to prediction markets in the US remains to be seen, but the state budget is clearly a victory for operators and the CFTC’s regulatory authority.