US States Increase Pressure on Prediction Markets: New Taxes and Conflicts

Lawmakers in North Carolina and New Jersey are advancing bills to tax prediction markets. They follow Illinois, which was the first US state to introduce a tax on these federally regulated platforms. In North Carolina, a budget report was passed in both chambers, proposing a 6% tax on prediction market net trading fee revenue. New Jersey has introduced separate legislative proposals for a 9% surcharge on prediction market operators. These developments reflect the growing interest of US states in generating revenue from gambling and closing the regulatory loopholes of these markets.

Numbers and facts

North Carolina has approved a budget report that includes a 6% tax on prediction market operators' net trading fee revenue. The proposal, unlike Illinois, does not establish a state licensing or regulatory framework for prediction markets. Instead, platforms like Kalshi would remain under CFTC (U.S. Commodity Futures Trading Commission) oversight but pay state taxes. Concurrently, North Carolina is raising its online sports betting tax from 18% to 23%. New Jersey also plans a 9% surtax on income derived from operating prediction markets through corresponding bills (Senate Bill 4447 and Assembly Bill 5336).

An interesting point here is the conflict with the original version of the New Jersey bills. These had envisioned a comprehensive regulatory framework for prediction markets, similar to sports betting providers. This would have required operators like Kalshi to obtain licenses from the New Jersey Division of Gaming Enforcement, pay the state's 19.75% sports betting tax, plus a 10% surcharge. These far-reaching provisions have now been significantly scaled back. States lose over $600 million in tax revenue from bets placed on unregulated prediction markets, the American Gaming Association (AGA) stated. Kalshi alone reported nearly $1.9 billion in college basketball wagers in February 2026. Sportsbooks in North Carolina paid over $132 million in taxes in 2025. The prediction market had an estimated total volume of $44 billion in 2025.

Background

Prediction markets function similarly to gambling apps and websites but are subject to different regulations. In the US, they are overseen by the CFTC at the federal level, not by individual state gambling regulators. This allows bettors from all states to participate, even in those where sports betting is still illegal. States such as Illinois, Maryland, Louisiana, New Jersey, and North Carolina are looking for ways to tax these markets to generate additional revenue. The current development in New Jersey follows a legal battle: Kalshi secured a preliminary injunction against New Jersey regulators in April. The Third Circuit found that the company was likely to succeed on its argument that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over its federally listed event contracts. This litigation is ongoing. This legal clash highlights the still unclear legal situation and the power struggles between federal and state authorities.

What it means for GGL-licensed casinos

The situation in the US, where the regulation of prediction markets is still inconsistent and many questions remain open, underscores the stability of the German gambling market under GlüStV 2021. For GGL-licensed casinos, this means a clear competitive position. They operate in an environment that offers transparency and security. The focus on player protection through deposit limits, stake limits per spin, and the central self-exclusion system LUGAS strengthens player trust. While the US is still experimenting with new taxes on prediction markets and testing various models, Germany's course is clearly defined. GGL casinos can rely on their fully regulated position and do not have to deal with legal grey areas as they exist in the US, for example, in connection with prediction markets. This creates planning security for operators and consumers alike.