North Carolina Gov. Josh Stein signed the state’s first comprehensive budget bill since 2023 on Tuesday and with it a new 6% tax on prediction market revenue and a 5 percentage point increase to the online sports betting tax. Though Stein signed the bill Tuesday morning, and the legislature passed it last Thursday, its effective date was last Wednesday.
Since the bill passed out of the legislature, some stakeholders have speculated that Kalshi had a hand in the prediction market tax which calls for the federally regulated platforms to be taxed by the state but not regulated by it. The state is the second this year to pass a bill that taxes prediction markets, though Illinois’ new law also calls for them to be regulated by the state. It’s unclear how either state would enforce such a law.
Kalshi sued the state of Illinois before the new law was set to go into effect July 1. Should Kalshi sue the state of North Carolina, it would clarify whether or not the company had a voice in the new tax.
During discussion on the budget bill, several Democratic lawmakers questioned why the prediction market tax was added. Democratic Rep. Pricey Harrison, who said she’d vote against the budget, told her colleagues during discussion that she believes that the prediction market tax “seems to undermine our ability to govern and regulate sports gambling. … It seems to harm tribal casinos and legal sports betting, and it seems to give them some veracity in our state.”
And according to NC Insider, budget writer Sen. Brent Jackson said the language first appeared in the budget bill the day before it was published. Democrats complained during debate that Republicans wrote the budget without any Democratic input.
“Sports betting companies are going to look at these frameworks and move into the prediction market,” Democratic Sen. Michael Garrett said during debate. “Why wouldn’t [they]? We’re building them the exit ourselves. … These are not small questions, and not one of them has an answer today. North Carolinians deserve to know that we saw it coming.”
New rule for personal tax deductions
The budget includes an online sports betting tax increase from 18% to 23% and changes the way gamblers can deduct gambling losses on their personal tax returns:
Deduction Amount. – In calculating North Carolina taxable income, a taxpayer may deduct from adjusted gross income either the standard deduction amount provided in subdivision (1) of this subsection or the itemized deduction amount provided in subdivision (2) of this subsection. The deduction amounts are as follows: [Editor’s note: No “subdivision (1) listed in bill text]:
(2) Itemized deduction amount. – An amount equal to the sum of the items listed in this subdivision. The amounts allowed under this subdivision are not subject to the overall limitation on itemized deductions under section 68 of the Code:
e. The amount allowed as a deduction for wagering losses under section 165(d) of the Code, to the extent the losses are not deducted in arriving at adjusted gross income.”
Ohio public comment period
The Ohio Casino Control Commission (OCCC) on Tuesday sent out a reminder of its public comment period for a proposed rule that would ban credit card funding for gambling accounts. The public comment period will run through July 17 at 5 p.m. local time. Stakeholders can email comments to [email protected], and per the OCCC press release, the commission will hold a public hearing after the comment period closes.
