North Carolina’s FY27 budget, signed on Tuesday, also introduces gambling loss deductions for taxpayers
North Carolina has adopted a new prediction markets tax and increased the tax on online sports betting under the FY27 state budget signed by Governor Josh Stein on Tuesday.
The state budget for the 2026/27 fiscal year increases North Carolina’s sports wagering tax from 18 per cent to 23 per cent, as agreed in late June, and also alters the distribution of this tax revenue.
Effective July 1, the amount of revenue that the North Carolina Major Events, Games, and Attractions Fund can receive is capped at $30 million annually, while North Carolina State University and the University of North Carolina at Chapel Hill are added as recipients of revenue proceeds.
The change in sports wagering tax distribution will also increase deposits to the General Fund by an estimated $50.7 million in FY27.
The new prediction markets tax will be charged at 6 per cent of net trading fee revenue and is expected to bring in just $1 million in FY27. This is based on an estimated trading volume of $2.16 billion in North Carolina this year, earning prediction market platforms trading fee revenue of around $28.3 million.
Promotional spending and incentives offered by prediction market platforms is expected to reduce the tax base to net trading fee revenue of $21.2 million.
The FY27 budget also introduces gambling loss deductions for taxpayers, up to the extent deductible for federal tax purposes. It also allows taxpayers that itemize deductions with gambling losses to deduct gambling losses retroactively to tax year 2025.
This is expected to cost the state $40.3 million in FY27, as taxpayers claim earlier losses, after which it is expected to reduce general fund revenue by between $19.7 million to $23.0 million each year.