North Carolina Increases Sports Betting Tax Rate, Implements New Prediction Market Tax in Newly Signed Budget

• Gov. Josh Stein (D) today signed the state’s nearly $34 billion budget into law
• The North Carolina budget includes an increase to the state’s sports betting tax rate and a new prediction market tax
• The budget also includes a change to the disbursement of sports betting tax revenues to state colleges

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North Carolina Gov. Josh Stein (D) today signed his first state budget into law, officially legalizing the nearly $34 billion spending plan.

With his signature, North Carolina increases its sports betting tax rate for all licensed operators, institutes a new prediction market tax, allows North Carolina gamblers to deduct losses on their taxes, and changes the disbursement of sports betting tax revenues for state colleges.

“After careful deliberation, this morning I will sign the state budget into law,” Stein said during a press conference today.

Sports Betting Tax Rate Finally Increased

The $34 billion budget easily passed through both the Senate and House of Representatives last week. The North Carolina House of Representatives first approved the budget on July 2 by an 88-21 vote before being sent to the Senate. Less than two hours later the Senate approved the budget by a 35-10 vote.

“We’ve shown that we can work together and deliver for the people of North Carolina. So, let’s celebrate this milestone and then let’s keep pushing. Come next spring, I will be ready and eager to work with the general assembly on next year’s budget so we can continue this progress we’re making today. Let’s keep building on our momentum so that in North Carolina we create a state that is safer, stronger, more prosperous, with real opportunity for every single person,” he said.

After more than a year of rumors, North Carolina will finally see its sports betting tax rate increased. The approved and legalized budget includes an increase to the state’s sports betting tax rate from 18% to 23%. State lawmakers discussed raising North Carolina’s sports betting tax rate since 2025, when Senate members included an increase of the rate to 36% in their approved budget. The House of Representatives, however, did not advocate for an increase and it was ultimately not included in the state’s finalized budget document.

North Carolina currently has eight licensed online sports betting operators who pay an 18% tax rate on gross sports betting revenue. So far in fiscal year 2026, the licensed sports betting operators have contributed more than $133 million in tax revenues to North Carolina, according to the North Carolina State Lottery Commission.

Under the new tax rate, the state would have taken in more than $170 million in tax revenues during the same period.

When we work together across our differences and put people first, we can make good things happen. That’s why today I’m signing the budget. https://t.co/PkDBjm8X9a

— Governor Josh Stein (@NC_Governor) July 7, 2026

Changes to College Sports Betting Revenue Disbursements

Additionally, the budget will expand the number of North Carolina universities that will receive sports betting tax revenues. The University of North Carolina and North Carolina State, in this budget, will for the first time begin to see portions of the state’s sports betting tax revenues.

Currently, the state’s 13 other UNC schools receive sports betting tax revenue dollars, but UNC and NC State do not. Under the budget, the two largest UNC schools would be eligible to receive sports betting tax revenues beginning July 1, 2027.

Under the new budget, 2.2% of sports betting revenues annually will be distributed equally among Division I public universities, limited to $400,000 per school each year. For Division II public universities, 19.5% of sports betting revenues annually will be earmarked, limited to $2.9 million per school.

Finally, 5.7% will be earmarked annually among public universities in the state for which the men’s football program competes in the Division I football bowl subdivision of the NCAA. This will be limited to $2.5 million a year per school.

New Prediction Market Taxes

The state will also now impose a new tax on Commodity Futures Trading Commission (CFTC) licensed prediction market operators, but no new regulations for the platforms.

The document includes a new 6% trading fee tax for operators. The tax will be imposed on “the operator’s net trading fee revenue apportionable to the state.” The tax does not impose any license, registration, or other regulatory requirements or obligations for CFTC-licensed prediction market platforms to operate in the state.

The budget allows for sports event contracts to be traded in the state under a much less expensive rate than licensed sports betting operators. The budget also imposes no additional state regulations on CFTC-licensed prediction market operators.

Gambling Loss Deductions Included

The budget also includes an allowance for North Carolina gamblers to deduct losses against winnings on state income taxes. Currently, North Carolina gamblers have to pay taxes on their winnings during the year no matter their losses. This means, if a gambler wins $15,000 in bets on the year, but also loses $16,000 in bets on the year, they still are responsible for paying income taxes on the $15,000 won, despite losing $1,000 overall in bets on the year.

Up until last year, the federal government allowed gamblers to deduct losses on their taxes. President Donald J. Trump’s (R) One Big Beautiful Bill Act was signed into law in July 2025, which included a change to the Internal Revenue Code that only allows professional gamblers to deduct 90% of their losses in a year, down from 100%.

This will also potentially help offset a new bill passed by the North Carolina legislature requiring licensed sports betting operators report any users who win more than $2,000 in a year to the Department of Revenue to be taxed. It would allow users to deduct losses as well.