This week's news is particularly poignant for me, as I had hoped to celebrate the US men’s soccer team for their flawless performance in the World Cup group stage. I anticipated discussing how their success would elevate sportsbook activity and prediction market engagement as they advanced to the Round of 32. While the USA did secure the top spot in Group D, their reserves faced a disappointing defeat against Turkey, losing 3-2, which dampens the team's overall momentum.
As we reflect on this week in the gambling sector, we must address a significant setback. The North Carolina legislature has decided to raise the tax on sportsbooks from 18% to 23%. This change was anticipated, but a surprising provision in the new law directly impacts bettors. If signed by Governor Josh Stein, the law will require winnings of $2,000 or more from a single sportsbook to be taxed, even in a state where players cannot deduct their losses. Essentially, if you win $2,000 and lose the same amount, you still owe state taxes on the winnings, compounded by a new federal rule limiting loss deductions to 90%. This unprecedented requirement for operators to report betting information to the state may inadvertently push North Carolina gamblers towards offshore sites and unregulated markets, potentially decreasing tax revenue instead of increasing it.
In summary, North Carolina sports bettors will now face a 4% tax on their winning bets without the ability to deduct losses, and operators will have to provide detailed betting records to the state. A bettor staking $50 on 20 wagers weekly could end up losing $2,600 annually due to these new regulations.
On a brighter note, World Cup betting is thriving on prediction markets. Since June 12, Kalshi has seen daily trading volumes surpass $1 billion, with over $17 billion processed since the tournament began. The volume recorded on Wednesday was double that of the Super Bowl, driven largely by the popularity of parlays, or “combos” as Kalshi refers to them. Prediction markets are thriving in areas where sportsbooks cannot operate, benefiting from the surge in betting activity, particularly as the USA performs well in the tournament.
Additionally, Kalshi is eyeing a valuation of $40 billion in its upcoming funding round, a significant increase from its previous valuation of $22 billion. Among the notable beneficiaries of this growth is Donald Trump Jr., who gained $300,000 in equity from his advisory role when Kalshi was valued at under $2 billion.
However, there are concerns regarding Polymarket’s potential player movement contracts, which may include high school students, raising questions about the platform's public perception.