North Carolina solidifies CFTC jurisdiction over prediction markets: new tax and licensing exemption
North Carolina Governor Josh Stein has officially signed legislation recognizing the exclusive jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC) over prediction markets such as Kalshi and Polymarket. This decision marks a significant step in regulating the rapidly growing sector of event-based derivatives.
A key element of the new law is the introduction of a 6% tax on net trading commissions derived from transactions conducted by state residents. However, importantly for market participants, the law does not require obtaining a separate local license or permit from North Carolina regulatory authorities. Thus, the state recognizes federal oversight by the CFTC as sufficient, avoiding duplication of regulatory requirements.
Market Analysis: This precedent could serve as a model for other states. Recognizing federal jurisdiction while imposing its own tax is a pragmatic approach that reduces the administrative burden on platforms while simultaneously allowing the state to generate revenue from this segment. For Kalshi and Polymarket, this means greater legal certainty at the state level, although the federal status of such contracts remains subject to litigation.
Expert Opinion: In my view, North Carolina demonstrates a mature approach to regulation. Instead of fighting prediction markets or imposing chaotic local bans, the state chooses a path of tax integration and recognition of the existing federal framework. This creates a more predictable environment for businesses and could accelerate the legitimization of prediction markets as a full-fledged financial instrument in other jurisdictions. However, investors should monitor how the CFTC will define the boundaries of its jurisdiction, especially regarding contracts related to political events.