North Carolina has raised its online sports betting tax from 18% to 23% of gross wagering revenue and added a 6% levy on prediction markets — the first time a US state has taxed both products in the same budget.
The increase was written into Senate Bill 257 within the state’s $34.4 billion budget and takes effect immediately. It lifts the rate operators pay on gross wagering revenue by five percentage points and, separately, applies a 6% tax to prediction markets, which are permitted to operate in the state without a specific licence. Sports betting in North Carolina is licensed by the North Carolina State Lottery Commission, which has overseen the market since its March 2024 launch.
Key Facts:
• Online sportsbook tax rises from 18% to 23% of gross wagering revenue under Senate Bill 257
• A new 6% tax applies to prediction markets, which may operate without a specific state licence
• Legislative analysts project sports-wagering tax revenue of $206 million in fiscal 2026-27, against $161.2 million under the prior rate
• Since the March 2024 launch, North Carolina sportsbooks have produced $1.6 billion in gross wagering revenue and $299 million in state tax
• Nationally, FanDuel and DraftKings together hold roughly 73% of online handle — the highest concentration since legalisation
Who actually pays a gross-revenue tax
Operators pay the tax, but the incidence rarely stops there. A gross wagering revenue tax is levied on what the book keeps after paying winners, so a five-point increase compresses margin directly. Operators have three levers in response: accept lower margin, cut promotional spend, or widen pricing — which in practice means holding a slightly larger share of each dollar wagered.
The national context makes the third lever more likely than it would have been three years ago. US sportsbooks held 10.15% of handle in 2025, turning $165.58 billion of wagers into $16.80 billion of gross gaming revenue and $3.66 billion in state tax. With FanDuel and DraftKings together controlling around 73% of online handle, the competitive pressure that historically forced books to absorb tax increases rather than pass them on has weakened. Concentrated markets pass costs through more easily than fragmented ones.
The prediction-market clause is the more novel change
The 6% levy on prediction markets is the part of this budget with implications beyond North Carolina. Prediction-market contracts on political and sporting outcomes have been contested state by state, with several regulators treating them as unlicensed gambling and federal courts largely siding with the exchanges on the basis of Commodity Futures Trading Commission jurisdiction.
North Carolina has taken a different route: rather than litigating whether these products are gambling, it has taxed them while allowing them to operate without a state licence. That is a materially different posture from a cease-and-desist, and it gives other states a template that does not require winning a jurisdictional argument first. For anyone following prediction-market pricing on Polymarket and Kalshi, a 6% state-level tax is a cost that has to be recovered somewhere in the spread.
What the state expects to collect
Legislative analysts project sports-wagering tax revenue of $206 million in fiscal 2026-27, against $161.2 million under the prior 18% rate — an expected gain of roughly $45 million. That projection assumes handle holds up as the rate rises, which is the assumption most worth watching. Since launch in March 2024, North Carolina sportsbooks have generated $1.6 billion in gross wagering revenue and $299 million in state tax, so the market has grown quickly enough to make the estimate plausible rather than optimistic.
The prediction-market levy is not separately forecast at a material figure, which suggests the state views it as establishing jurisdiction and precedent rather than as a revenue line.
What This Means for Bettors
Market impact: the immediate effect is on pricing rather than availability. A five-point rise in gross-revenue tax gives North Carolina operators a direct incentive to widen hold, most visibly on the products where price comparison is hardest — same-game parlays, alternate lines and boosted-odds markets, where a bettor cannot easily benchmark the price against another book. Straight sides and totals are the most shopped markets and therefore the most likely to stay competitive.
One concrete implication: if the tax is passed through at even half its value, North Carolina parlay pricing should diverge measurably from neighbouring states over the next two to three months. Bettors with access to multiple jurisdictions can test this directly by comparing the same multi-leg ticket in North Carolina against a lower-tax state — a widening gap on identical legs is the pass-through showing up in the price, and it will appear in parlays before it appears in point spreads.
Where the legal markets are: North Carolina’s online market is licensed by the North Carolina State Lottery Commission, which has regulated it since March 2024. New Jersey, licensed by the New Jersey Division of Gaming Enforcement (NJDGE), remains one of the most competitive and lowest-friction regulated markets in the country and is a reasonable pricing benchmark for anyone comparing across state lines.
Figures correct as of July 20, 2026. Informational only — not financial or betting advice. 18+ / 21+ depending on jurisdiction. See Responsible Gambling notice below.
FAQ
Q: What is North Carolina’s new sports betting tax rate?
A: 23% of gross wagering revenue, up from 18%, under Senate Bill 257 within the state’s $34.4 billion budget.
Q: Does the tax increase apply to bettors directly?
A: No. It is levied on operators’ gross wagering revenue, not on individual wagers or winnings. The practical effect on bettors comes indirectly, through pricing and promotional spend.
Q: How are prediction markets treated?
A: They face a new 6% tax and are permitted to operate without a specific state licence — a notably different approach from states that have tried to bar them outright.
More regulatory coverage on this site: Arizona opening 10 retail betting licences. Budget detail via Covers.
Gambling carries financial risk and can be addictive. If you or someone you know needs help, visit GamCare (UK), call 1-800-GAMBLER (US), or see our Responsible Gambling page. 18+ / 21+ depending on jurisdiction.
