WILMINGTON — North Carolina has introduced the first-of-its-kind prediction market tax in the state budget while also increasing the sports betting tax by 5%; both sources of revenue will be directed toward college athletics across the state, including UNCW.
Earlier this month Gov. Josh Stein signed the first comprehensive state budget in over three years, which also changes state gambling laws. It increases the sports betting tax from 18% to 23% and puts a new 6% tax on the net-trading fee of prediction markets. Prediction markets allow people to bet on anything, even beyond sports — such as election outcomes, pop culture, and current events.
Per Bloomberg Tax, the new North Carolina tax is estimated to generate $1 million in revenue in fiscal year 2026-2027.
READ MORE: UNCW: $3.1M in sports gambling revenue, state budget proposals could deliver more
Mobile sports betting has only been permitted in the state since 2024. Pew Research states as of October 2025, 22% of U.S. adults admitted to placing a sports bet that year. Out of those adults 10% placed the bet online, up from 6% in 2022.
Revenue from the sports-betting tax has been projected at $206 million for the upcoming fiscal year, nearly $5 million more than the previous years due to the increased tax rate. Out of the $206 million, $126 million is estimated to go toward the state’s general fund. University athletics get 20% of the revenue split among the state’s public schools.
Predication markets, such as Kalshi and Polymarket, will serve as an additional form of betting revenue for the state, albeit one that will bring in less money. Bets on the platforms such as Polymarket starting at $1 and having no clear maximum who will win season 13 of Love Island UK to when the U.S. and Iran will make a nuclear deal.
The emergence of prediction market platforms is fairly new — Kalshi was founded in 2018 and Polymark in 2020. Because of their novelty, regulation is still a debated topic.
The federal Commodity Futures Trading Commission — which regulates markets involving physical commodities, financial instruments, and event contracts — claims authority over prediction markets. Classifying them as trade investments distinguishes prediction markets from gambling, which is regulated by states — though some states and critics of the platforms have argued prediction markets should be considered gambling.
Some states, including Illinois and Kentucky, have sued Kalshi and Polymarket citing prediction markets constitute unlicensed betting in violation of state gambling and consumer protection laws. Minnesota has completely banned prediction markets, which resulted in a lawsuit from the Commodity Futures Trading Commission. The CFTC claims these bans are not within state authority but rather under CFTC jurisdiction.
Congress has not passed legislation on who should regulate prediction markets, but some lawmakers are attempting to pass a bill banning politicians and their families from placing bets on election or government-based prediction markets, equating it to insider trading.
Instead of wading into the regulatory arena, North Carolina has chosen a different approach: acceptance of the markets and choosing to tax them. It is the first state to do so.
The tax is not associated with any required licences, registrations or other obligations for predication markets, as would be required of gambling enterprises.
Notably, the 6% tax on prediction markets is significantly less than the 23% tax on sports betting operators. A source on background stated prediction markets say they bring in less revenue than sports betting sites and therefore a lesser tax is warranted.
Aside from changing the taxable percentages, the state budget also allows tax deduction for 90% of gambling losses, matching the federal maximum.
The changes to the sports betting law are the first since sports betting was legalized; in 2025, the Senate attempted a budget provision to raise the rate to 32%; however, the request was not included in the House’s budget proposal.
A portion of revenue from sports betting is split amongst 17 public universities in the UNC school system’s athletic departments. By raising the tax rate upwards of 5% these universities are expecting to see a combined millions more in funding.
As of 2025, UNC schools reported receiving $41.2 million in funds from sports betting taxes. Each school’s athletic department has received an equal allotment of this revenue at $3.1 million.
Port City Daily asked UNCW what it has spent the money on and what it plans to do with the increase in funds. No answers were received by the press. In January 2025, Carolina Journal first reported that some of the revenue was used for the $3.45 million dollar renovation to Brooks Field.
Allocation of said funds are divided into classifications. More than one classification can be applied to a university if applicable.
- Class I: 2.2% annually distributed to public universities with a majority of Division I teams. The maximum amount allowed is $400,000.
- Class II: 19.5% annually distributed to public universities with a majority of Division I and II teams. The maximum amount allowed is $2.9 million.
- Class III: 5.7% annually distributed to public universities with a Division I football team competing in the Football Bowl sub-division of the NCAA.
All UNCW teams that are a part of the NCAA, compete at a Division I level.
Some of the sports betting revenue is also allocated to other sources, including up to $30 million to the state’s Major Events, Games, and Attractions Fund, $2 million for gambling-addiction education and treatment, $1 million for North Carolina Amateur Sports and $1 million toward the North Carolina Youth Outdoor Engagement Commission.
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