North Carolina has become the first state to formally recognize the federal government’s authority over prediction markets, carving out a new approach as states across the country grapple with the rapidly expanding industry.

A provision tucked into the state’s budget, signed into law Tuesday, imposes a 6% tax on the net trading revenue of federally regulated prediction market operators. The budget also explicitly acknowledges that companies registered with the federal Commodity Futures Trading Commission may legally operate in North Carolina under the Commodity Exchange Act. The language states that the CFTC has “exclusive” regulatory authority over prediction markets, marking the first time a state has codified that position into law.