In short
- North Carolina has passed a law recognizing the CFTC’s jurisdiction over futures markets such as Kalshi and Polymarket, and cracking down on states trying to police them as gambling.
- The plan, signed by Governor Josh Stein on July 7, taxes the platforms at 6% of their North Carolina-sourced profits, compared to 23% for sports bettors.
- It comes days after a New York judge tossed out Kalshi’s landmark court case, deepening a national divide that is heading to the high courts.
North Carolina has been one of the few states that has sided with federal officials in the growing battle prediction marketsimplementing a law that recognizes the CFTC’s jurisdiction over platforms such as Kalshi and Polymarket.
Governor Josh Stein signed it on July 7 as part of the 2026 state budget, Senate Bill 257. A futures market licensed by the Commodity Futures Trading Commission can legally operate in the state, the law says, because the Commodity Exchange Act establishes “special institutional jurisdiction” for such platforms.
Prediction markets and government taxes
The law leaves Washington’s oversight of the prediction markets and cuts them. It imposes a 6% tax on retail sales made by North Carolina residents starting January 1, 2027, but the law makes it clear that the tax does not require licensing, registration or any other regulation.
This is a much lighter touch than the state’s handling of bookmakers: North Carolina immediately raised the tax on sports bettors from 18% to 23% of all wagers. It is more lenient than other countries are following. Kentucky offered tax platforms 14.25% of fees, which resulted in a CFTC complaintswhile Illinois folded the betting markets into its sports betting category with a fixed tax and licensing laws that Kalshi quickly moved to. challenge in court.
To stop corrupting the government
North Carolina’s views are unusual. More than a dozen states have moved to market prediction markets as unlicensed sports betting, leading to more lawsuits. The CFTC has the defendant at least nine countries to protect what they call their sovereignty, and Kentucky suit against Kalshi and Polymarket that is the immediate front. The courts were bitterly divided, with towers winning in New Jersey and Tennessee but losing in Maryland, Nevada and Arizona.
The North Carolina order comes days after Kalshi’s backlash, with a federal judge in New York this week he rejects Kalshi’s request to prevent state gambling regulators, finding the Commodity Exchange Act does not preempt New York gambling laws as used in its gaming agreements.
With rulings pointing in different directions, the dispute is increasingly likely to go to the US Supreme Court. The CFTC is separate to complete the constitution of the country on the terms of the deal that could eventually go well at the federal and state levels, with its public comment period closing on July 27.
Daily explanation A letter
Start each day with top stories right here, including originals, podcasts, videos and more.
