North Carolina’s 6% Prediction-Market Tax Adds Pressure Around Kalshi State Fights

Meta description: North Carolina’s 6% prediction-market tax starts in 2027 as Nevada and other states test Kalshi’s CFTC preemption defense.

Tags: Kalshi, Nevada Gaming Control Board, North Carolina, CFTC, Ninth Circuit, prediction markets

Market platform: Kalshi

Category: Regulation

North Carolina has signed a 6% tax on prediction-market operators’ net trading-fee revenue, effective January 1, 2027, adding a revenue-focused state model while Nevada pursues a separate gambling-law enforcement case against Kalshi. The two tracks show how states are testing the edges of federal preemption without using the same legal tools.

What did North Carolina do to prediction markets?

North Carolina’s 2026 budget legislation, Senate Bill 257, creates a 6% tax on net trading-fee revenue from prediction-market operators. Gov. Josh Stein signed the budget on July 7, 2026, according to state budget records and coverage of the enacted legislation. The prediction-market tax is scheduled to take effect January 1, 2027.

The law matters because it does not mirror the enforcement approach taken by Nevada gaming regulators. Rather than requiring federally regulated prediction-market exchanges to obtain a state gaming license, North Carolina chose a tax mechanism tied to revenue. That gives state lawmakers a narrower way to reach platforms whose core legal argument is that the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive oversight of federally listed event contracts.

The 6% rate also sits apart from the state’s broader sports-betting tax framework. North Carolina’s budget raised the online sports-betting tax to 23%, while setting a lower rate for prediction-market trading-fee revenue. That difference reflects the legislature’s decision to treat the categories differently, even as both involve event-based trading or wagering activity tied to North Carolina residents.

Why does the North Carolina tax matter for Kalshi?

Kalshi’s central legal position in state fights has been that contracts listed on a CFTC-regulated designated contract market are governed by federal commodities law, not state gambling law. North Carolina’s tax does not decide that question, but it shows a different state response: collect revenue from prediction-market activity while leaving exchange-level supervision to the federal regulator.

That distinction is now important across the industry. States that want to challenge prediction-market platforms have at least two broad routes. One is Nevada’s model, which treats certain sports, election and entertainment contracts as activity that requires state gaming approval. Another is North Carolina’s model, which accepts the presence of federally regulated exchanges but imposes a state tax on revenue connected to residents.

Those approaches raise different preemption questions. A licensing or prohibition case asks whether a state can stop or restrict federally listed contracts. A tax case asks whether a state can impose a generally applicable revenue obligation without controlling the exchange’s listing, matching or clearing functions. The answer may not be the same in every court or under every statute.

For Kalshi and other platforms, the practical issue is margin and market access. A state injunction can block products in a jurisdiction. A state tax can leave access intact while reducing the economics of the business. If more states follow North Carolina, prediction-market operators could face a patchwork of tax obligations even where they avoid direct gaming enforcement.

What is happening in Nevada?

Nevada has taken the enforcement route. The Nevada Gaming Control Board’s public timeline says it issued a cease-and-desist letter to Kalshi on March 4, 2025, and that Kalshi filed a federal lawsuit on March 28, 2025 seeking to stop enforcement of Nevada gaming law. The federal district court initially granted Kalshi a preliminary injunction on April 9, 2025, preventing the board from enforcing state gaming law against the company.

That federal posture later changed. The same NGCB timeline says the federal district court dissolved Kalshi’s preliminary injunction on November 25, 2025. Nevada then filed a new state enforcement action against Kalshi on February 17, 2026, in the First Judicial District Court in Carson City, identified in public materials as State ex rel. Nevada Gaming Control Board v. KalshiEx, LLC, No. 26 OC 00050 1B.

On March 20, 2026, Judge Jason D. Woodbury issued a temporary restraining order barring Kalshi from offering prohibited event contracts in Nevada, according to the NGCB timeline and contemporaneous court coverage. Bloomberg Law reported that the order covered sports, election and entertainment event contracts. TechCrunch reported that the state argued Kalshi lacked Nevada gaming licenses and allowed users under 21, while Kalshi argued that CFTC registration placed its contracts under exclusive federal oversight.

The state-court order moved beyond a temporary restraint. The NGCB timeline lists April 3, 2026 as the date the state court enjoined Kalshi from offering prohibited event contracts in Nevada. In a July 24, 2026 public statement, the Nevada Gaming Control Board said the First Judicial District Court entered a preliminary injunction on May 18, 2026 prohibiting Kalshi from offering or facilitating contracts on sports-, election- or entertainment-related events within Nevada.

What did the Ninth Circuit decide?

The Ninth Circuit appeal docketed as State of Nevada v. KalshiEX, LLC, No. 26-1304, was tied to the removal and remand fight arising from the federal case 2:26-cv-00406, according to the Justia docket. The docket shows the appeal was filed March 5, 2026 and argued and submitted on April 16, 2026 before Judges Ryan D. Nelson, Bridget S. Bade and Kenneth K. Lee.

That case was not the direct merits vehicle for deciding whether Kalshi may offer sports, election and entertainment contracts in Nevada. It concerned whether Nevada’s enforcement case belonged in state court or federal court. Law360 reported on May 22, 2026 that the Ninth Circuit allowed Nevada and Washington regulator suits against prediction-market companies to proceed in state court, resolving that remand issue.

The distinction matters because preemption can appear in more than one procedural setting. A remand appeal decides where the case proceeds. A merits ruling decides whether federal commodities law blocks the state’s gambling enforcement. Treating those as the same question can overstate what an appellate docket actually resolved.

How does this fit with other state cases?

Nevada is not acting alone. The NGCB timeline also lists enforcement actions against Polymarket and Coinbase in Nevada state court, with temporary or preliminary relief entered against those companies in 2026. The Nevada attorney general’s office said on June 3, 2026 that Polymarket joined Kalshi and Coinbase as prediction-market companies enjoined while the state pursued enforcement actions.

Kalshi has also litigated related preemption questions outside Nevada. In New Jersey, the Third Circuit addressed whether state gambling enforcement could be applied to Kalshi’s sports event contracts. Other state disputes have raised similar arguments under the Commodity Exchange Act, with courts asked to decide how far CFTC oversight reaches when event contracts resemble products historically regulated as gambling.

The result is a divided and still-developing legal map. Some states are trying to stop particular contracts under gaming laws. Others are experimenting with taxes on trading-fee revenue. The industry’s federal preemption argument may have different force against those different state measures, especially where a law collects revenue but does not purport to license the exchange.

What is the next milestone?

The clearest dated milestone is North Carolina’s January 1, 2027 effective date for the 6% prediction-market tax. Unless the law is changed or challenged before then, prediction-market operators with covered North Carolina revenue will face a new state tax obligation at the start of next year.

In Nevada, the immediate stakes remain tied to the state-court injunction and any further appeals over whether Nevada gaming law can be enforced against Kalshi’s event contracts. The broader industry question is now sharper than a single case: whether states can build enforceable gaming or tax regimes around CFTC-regulated event markets without crossing the line into federally preempted exchange regulation.