North Carolina Law Recognizes CFTC Authority Over Prediction Markets

On July 7, 2026, North Carolina Governor Josh Stein signed Senate Bill 257, establishing the Commodity Futures Trading Commission (CFTC) as the federal authority overseeing prediction markets, including platforms such as Kalshi and Polymarket. This statute allows these platforms to operate legally within the state while imposing a tax of 6% on net trading fees attributable to North Carolina residents, starting January 1, 2027. This tax rate is significantly lower than the recently raised 23% rate for sports betting operations in the state.

This legislative decision marks North Carolina's divergence from other states that have opted to regulate prediction markets similarly to gambling. More than a dozen states have classified these markets as unlicensed sports betting, leading to legal disputes over jurisdiction. The CFTC has already filed lawsuits against multiple states to defend its oversight role, particularly following a recent ruling against Kalshi in New York.

North Carolina’s approach not only legitimizes prediction markets under a lighter regulatory framework but it also contrasts sharply with the intensified regulatory environment in other states. For instance, Kentucky's recent legislation imposes a 14.25% tax on such platforms, which has sparked a complaint from the CFTC.

The implications of North Carolina’s law extend to the future of prediction markets across the United States as it highlights a growing divide in how states perceive and regulate these platforms. This could set a precedent for future legislation in other states as seen in the current regulatory climate.

As this landscape evolves, observers will likely focus on how other states respond to North Carolina's regulatory model and whether more states will choose to recognize the federal jurisdiction advocated by the CFTC.