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Lawmakers in New Jersey have moved forward with legislation that would place a new tax on prediction market operators. On June 28, both the Senate Budget and Appropriations Committee and the Assembly Budget Committee approved companion bills, Senate Bill 4447 and Assembly Bill 5336, with committee substitutes.
The votes were 9–4 in the Senate and 10–4 in the Assembly, sending the measures to second reading in each chamber.
The revised proposal introduces a 9% surtax on gross income earned by prediction market platforms during a tax year. This levy would apply in addition to any existing obligations under New Jersey’s corporation business tax or gross income tax.
During the Senate committee session, Chairman Paul Sarlo described the measure as a “first step” toward regulating prediction markets, adding that lawmakers intend to “even up the territory with all of our sportsbook folks.”
The Office of Legislative Services estimates the bill will increase state revenue by $10.3 million to $15.3 million in fiscal year 2027.
Bill sees heavy watering down
New Jersey’s push to tax prediction markets was stripped back significantly from its original form. While lawmakers voted along party lines to advance the measure, but the substitute text removed most of the tougher provisions that had been included when the bills were first introduced.
The initial versions of Senate Bill 4447 and Assembly Bill 5336 had laid out a detailed licensing system, treating sports event contracts as sports betting.
They proposed a 29.75% tax rate by combining the state’s 19.75% sportsbook tax with an extra 10% surcharge. Operators would have been required to obtain licenses from the Division of Gaming Enforcement, follow responsible gaming standards, and face criminal charges if they offered contracts without approval.
The Attorney General’s office would also have had authority to seek injunctions and fine violators up to $1 million per day.
Those provisions, along with bans on markets tied to death, disasters, or political elections, were all removed. In their place, lawmakers settled on a simple 9% surtax on gross income from prediction markets, abandoning the broader regulatory framework that had been planned at the outset.
NJ may look to the Supreme Court to decide if prediction markets are illegal sports betting
As it pushes for taxes on prediction markets, New Jersey is also weighing whether to take its fight against prediction markets to the nation’s highest court.
The Attorney General’s Office has already filed paperwork asking the U.S. Supreme Court for more time to submit a petition, with a new deadline set for September 4.
The move follows an April ruling from the U.S. 3rd Circuit Court of Appeals, which blocked New Jersey’s attempt to shut down Kalshi and other platforms. The court concluded that sports prediction contracts fall under the Commodity Exchange Act and therefore can only be regulated by the Commodity Futures Trading Commission.
Solicitor General Jeremy Feigenbaum stressed the stakes in his filing, writing, “This issue is tremendously important: The Third Circuit majority’s conclusion, that sports bets fall under the exclusive jurisdiction of the Commodity Exchange Act and that the Act preempts state regulation of these sports bets, would federalize a multibillion‑dollar‑a‑year sports‑wagering industry at the expense of every state law in the country.”
New Jersey’s Division of Gaming Enforcement had earlier sent cease‑and‑desist letters to Kalshi and Robinhood in March 2025, accusing them of offering illegal sports bets under state law.
But with the appeals court siding against the state, the Supreme Court now looks like the next and ultimate stop for state regulators and prediction markets.
