Former New Jersey Governor Chris Christie believes North Carolina made a mistake by including prediction markets in its state budget. We see it differently. While Christie argues the state is rewarding companies that should be treated like traditional sportsbooks, North Carolina may actually be positioning itself ahead of nearly every other state by recognizing the reality of today's regulatory landscape.
Right now, prediction markets operate under the oversight of the Commodity Futures Trading Commission (CFTC). Whether you agree with that framework or not, it is the current federal system. Instead of spending years fighting a legal battle that could ultimately fail, North Carolina has chosen to work within the existing rules while creating a path to collect tax revenue that many other states are leaving on the table.
The Current Reality Can't Be Ignored
Christie's opinion centers on the belief that sports-related prediction markets should be regulated exclusively by states. That argument continues to play out in courtrooms across the country, but it is far from settled. Today, CFTC-regulated platforms like Kalshi continue operating under federal oversight while litigation moves through the courts.
North Carolina's lawmakers appear to have recognized that reality rather than pretending it doesn't exist. From our perspective, the state's approach offers several potential advantages:
- It acknowledges the current federal regulatory framework.
- It creates an opportunity to collect tax revenue.
- It avoids lengthy legal battles that may not succeed.
- It positions North Carolina to adapt as the industry grows.
That doesn't mean the legal debate is over. It simply means the state is responding to the rules that exist today rather than waiting years for a final answer.
Tax Revenue Beats No Revenue
One of Christie's biggest concerns is that prediction markets are subject to a lower tax rate than traditional sportsbooks. That is a fair policy discussion for lawmakers to have. The alternative, however, deserves just as much attention.
Many states continue to try to prohibit prediction markets altogether, and as a result, they collect little or no tax revenue from activity on federally regulated platforms. North Carolina chose a different path. If prediction markets remain legal under federal law, collecting some tax revenue could prove more beneficial than collecting none at all.
A Chance to Become a Model for Other States
Instead of viewing prediction markets solely as a legal problem, North Carolina appears to treat them as an emerging financial product that warrants its own framework. If federal courts ultimately uphold the CFTC's authority over sports-related event contracts, states that spent years trying to block the industry may find themselves scrambling to catch up.
I believe this will ultimately be the case, and prediction markets aren't going anywhere. North Carolina, meanwhile, would already have a system in place that recognizes prediction markets while generating revenue from their growth. That doesn't guarantee success, but it could give the state an early advantage if the federal regulatory model remains intact.
The Trade Handle Prediction Markets Take
We respect Chris Christie's perspective, even if we reach a different conclusion. His concerns reflect the position shared by many state regulators and the traditional gaming industry. Those arguments deserve to be part of the conversation. At the same time, policy should reflect the world as it exists today.
The CFTC currently regulates prediction markets, and they continue to expand despite legal challenges. North Carolina's decision acknowledges that reality instead of ignoring it. If prediction markets continue to become a permanent part of the financial landscape, the states willing to build sensible policies around them rather than simply oppose them may ultimately find themselves in the strongest position.