New Jersey lawmakers have moved forward with legislation that would impose a new tax on prediction market operators after committees in both legislative chambers approved revised versions of the proposals.
On June 28, the Senate Budget and Appropriations Committee voted 9-4 to advance Senate Bill 4447, while the Assembly Budget Committee approved Assembly Bill 5336 by a 10-4 vote. Both measures now move to second reading.
The updated legislation replaces an earlier proposal with a simplified approach that applies a 9% surcharge on the gross income generated by prediction market platforms during a tax year. The surcharge would apply in addition to taxes already owed under New Jersey’s Gross Income Tax or Corporation Business Tax.
Lawmakers Narrow Original Proposal
The first version of the legislation proposed licensing prediction market operators through the Division of Gaming Enforcement and treating sports event contracts like sports betting. It also sought to prohibit contracts involving political elections, disasters, deaths and public officials trading in political markets.
Those provisions have been removed.
The original bills also proposed applying New Jersey’s 19.75% sportsbook tax plus an additional 10% surcharge, creating a combined rate of 29.75%. Responsible gambling rules, criminal penalties for unlicensed operators, injunction powers for the Attorney General and fines of up to $1 million per day were also dropped from the revised legislation.
Sponsors Outline Regulatory Goals
Senate President Nick Scutari and Budget Committee Chair Paul Sarlo sponsor the Senate bill, while Assembly Speaker Craig Coughlin is among the Assembly sponsors.
During the Senate committee meeting, Sarlo described the proposal as a starting point for broader oversight of the sector.
The legislation represents a “first step” on state regulation of prediction markets, Sarlo said, adding that there is “lot more to come on prediction markets” as lawmakers seek to “even up the territory with all of our sportsbook folks.”
Coughlin also said prediction market companies operate similarly to sportsbooks and should face a comparable tax structure.
Representatives from organizations including the AFL-CIO and prediction market operator Polymarket submitted testimony opposing the legislation.
Donna DeCaprio, president of Unite Here Local 54, argued that taxing prediction markets could unintentionally recognize businesses she believes are operating illegally.
“If the state taxes prediction markets, it appears to legitimize them,” she said. “Jobs in New Jersey have been lost and will continue to be lost as a result of this.”
According to the nonpartisan Office of Legislative Services, the proposal could generate between $10.3 million and $15.3 million in state revenue during fiscal year 2027.
Proposal Follows Kalshi Court Victory
The legislation was introduced weeks after Kalshi secured a preliminary injunction in its federal case against New Jersey’s Division of Gaming Enforcement.
In April, the Third Circuit upheld an earlier ruling that temporarily blocked state enforcement, finding that Kalshi’s sports event contracts fall under the exclusive jurisdiction of the Commodity Futures Trading Commission.
Following that decision, Kalshi filed lawsuits against several states, including Kentucky and Illinois, where lawmakers have approved legislation aimed at taxing prediction market operators.
Source:
“NJ lawmakers advance bill to tax prediction market operators”, northjersey.com, Jun 30, 2026
The post New Jersey Advances Prediction Market Tax Bill first appeared on RealMoneyAction.com.