North Carolina has taken a decisive step in the evolving regulatory landscape for prediction markets, while major platform Polymarket simultaneously advances toward a U.S. license for margin trading. On July 7, Governor Josh Stein signed Senate Bill 257 into law, which explicitly recognizes that the Commodity Futures Trading Commission (CFTC) holds federal preemptive authority over prediction markets. The law permits platforms like Polymarket and Kalshi to operate legally in the state if they are registered with the CFTC, and it imposes a 6% tax on net trading fee revenue attributable to North Carolina residents starting January 1, 2027. This tax rate is significantly lower than the 23% tax on sports betting operators in the state, signaling a friendlier approach compared to jurisdictions that seek to classify event contracts as gambling.
This move sets North Carolina apart from a growing number of states that are attempting to subject prediction markets to state gambling regulations and licensing. Kentucky, for instance, passed a bill requiring a 14.25% tax on transaction fees, prompting a CFTC lawsuit, while Illinois folded prediction markets into its sports wagering framework with a tiered tax and licensing requirements—a decision Kalshi is challenging in court. Earlier this week, a federal judge denied Kalshi’s motion for a preliminary injunction against New York’s enforcement of gambling laws on sports-event contracts, a ruling that legal experts say could negatively affect Kalshi’s battles in other states.
In parallel, Polymarket is seeking regulatory approval to introduce margin trading in the United States, according to a Bloomberg report. The platform acquired CFTC-licensed derivatives exchange QCEX for $112 million in 2025, giving it a regulated foothold in the U.S. market after years of restrictions. Margin trading would allow users to post collateral rather than fully fund every position, boosting capital efficiency for professional traders and market makers. However, it also introduces risks around leverage, liquidations, and customer protection, especially given the binary, jump-to-zero-or-one nature of event contracts. If approved, margin trading could deepen liquidity and transform prediction markets into a more sophisticated financial product, but regulators are likely to scrutinize the risk management framework closely.
These developments reflect a broader struggle between federal derivatives regulation and state gambling laws. Supporters argue that event contracts are legitimate financial instruments that improve forecasting, while opponents view many such markets as disguised betting. Polymarket’s margin ambitions and North Carolina’s new law together highlight the sector’s rapid evolution from retail speculation toward an institutional-grade market structure, even as legal uncertainties remain.
