North Carolina spent years deciding how legal sports betting should work. Sportsbooks needed licenses. Operators agreed to state oversight. They paid taxes on gambling revenue and operated under rules designed specifically for wagering.
Now the state is effectively acknowledging a second path for companies offering something that can look remarkably similar to sports betting, and that path may be considerably cheaper.
North Carolina recently increased its tax on interactive sportsbook operators from 18% to 23% of gross wagering revenue, effective July 1. Meanwhile, beginning January 1, 2027, prediction-market operators will face a 6% tax on net trading-fee revenue attributable to North Carolina customers. The new framework does not subject those platforms to the same state sportsbook licensing regime.
Those percentages aren’t directly comparable. One taxes sportsbook revenue and the other taxes trading fees, but the contrast highlights a much bigger problem for the regulated betting industry.
What exactly is a sportsbook anymore?
A customer can open a legal sportsbook and wager on NFL games. On a prediction market, that same customer may be able to buy a contract whose value depends on whether that NFL team wins.
Different terminology. Different mechanics. Potentially the same underlying question: Who wins? Yet the companies facilitating those transactions can operate under dramatically different regulatory structures.
Traditional sportsbooks such as FanDuel and DraftKings entered states one at a time, accepting licensing requirements, gaming regulation, and state taxes as the price of gaining legal market access. Prediction markets argue that contracts traded on federally regulated exchanges fall under the jurisdiction of the Commodity Futures Trading Commission rather than individual state gambling regulators.
North Carolina’s new law gives that argument particularly significant support. Its framework recognizes contracts listed by qualifying CFTC-regulated markets as lawful under federal regulatory authority rather than pushing them into the state’s sportsbook licensing system. That creates an obvious competitive question.
If a company can offer sports-related markets nationally under federal oversight, why would it voluntarily become a conventional sportsbook and navigate dozens of separate state regulatory systems? The answer matters well beyond North Carolina.
States built the post-PASPA sports betting industry around a simple bargain: operators receive legal access to customers, and states receive licensing control, consumer protections, and tax revenue. Prediction markets threaten to scramble that bargain.
And states aren’t even agreeing on whether they should be allowed to do it. North Carolina is explicitly accommodating federally regulated event contracts while taxing them. Utah, by contrast, recently won a federal court ruling allowing it to enforce state anti-gambling laws against prediction-market activity, as the broader battle over federal and state authority continues.
New York regulators are similarly fighting Kalshi’s contention that its sports contracts fall outside traditional state gambling jurisdiction. The result is an increasingly strange American betting landscape.
One company may spend millions obtaining gaming licenses, complying with state-specific wagering regulations and handing over 23% of its North Carolina gross wagering revenue.
Another can offer contracts based on sporting outcomes while operating through an entirely different regulatory framework.
For years, the question facing states was whether to legalize sports betting. The next question may be far more disruptive: Why bother becoming a sportsbook at all?
North Carolina Department of Revenue | Axios Raleigh | SportsBettingLegal PASPA Guide
