Key Points
- Legislative committees in New Jersey’s Senate and Assembly passed matching bills imposing a 9% surtax on prediction market platforms.
- Senate committee approved the measure 9-4, while Assembly committee voted 10-4, advancing both bills to second reading.
- Lawmakers eliminated original proposals for a 29.75% tax and mandatory state licensing requirements.
- Revenue projections estimate the tax will generate between $10.3 million and $15.3 million during fiscal 2027.
- The state’s Attorney General seeks additional time to petition the Supreme Court after losing an appeal concerning Kalshi.
Legislators in New Jersey moved forward with plans to impose taxes on prediction market companies during proceedings held on June 28. Two separate legislative committees granted approval to companion measures targeting these platforms.
Senate Bill 4447 received backing from the Senate Budget and Appropriations Committee. Meanwhile, the Assembly Budget Committee approved its corresponding legislation, Assembly Bill 5336.
Committee substitutes were introduced for both measures prior to voting, resulting in substantial revisions to the original text. The Senate tally reached 9-4, while Assembly members voted 10-4 in favor.
Each chamber will now conduct a second reading of its respective bill. This procedural step precedes consideration by the full legislature.
Under the approved framework, prediction market operators would pay a 9% surtax calculated on their annual gross income. This levy would supplement existing corporate and income tax obligations at the state level.
Paul Sarlo, who chairs the Senate Budget Committee, characterized the legislation as an initial move toward oversight of this emerging sector. He emphasized that the intent is to establish parity with regulatory standards currently imposed on sports wagering operations.
According to projections from the Office of Legislative Services, implementation of this tax structure could yield revenues ranging from $10.3 million to $15.3 million when fiscal year 2027 concludes.
Original Legislation Underwent Significant Revisions
The measures that gained committee approval bear little resemblance to their initial versions. Legislators stripped away most enforcement mechanisms and regulatory provisions contained in earlier drafts.
Previous iterations classified sports event contracts as a category of sports betting. Those versions mandated a licensing framework administered by the Division of Gaming Enforcement.
The original proposal featured a 29.75% tax rate. This figure represented a combination of the current 19.75% levy on sportsbooks plus an additional 10% surcharge.
Platforms would have been required to secure state authorization before legally offering prediction contracts. Operating without proper licensing could have resulted in criminal prosecution under the initial framework.
The Attorney General would have possessed authority to pursue injunctive relief through the courts. Daily penalties under that version could have reached $1 million for violations.
Earlier drafts also contained prohibitions on contracts related to fatalities, catastrophic events, or electoral contests. The current iteration retains only the 9% surtax, having eliminated licensing mandates and content restrictions.
Supreme Court Challenge Remains Under Consideration
Beyond taxation efforts, New Jersey continues exploring litigation at the federal level. The state’s legal representatives are contemplating whether to bring the matter before the Supreme Court.
The Attorney General’s office submitted a request extending the deadline for filing a formal petition. That deadline now stands at September 4.
This development stems from a decision issued in April by the U.S. 3rd Circuit Court of Appeals. The appellate panel rejected New Jersey’s attempt to halt operations of Kalshi and comparable platforms.
The court determined that sports prediction contracts fall within the scope of the Commodity Exchange Act. Under this federal statute, regulatory authority resides with the Commodity Futures Trading Commission rather than state governments.
Solicitor General Jeremy Feigenbaum contended that the ruling undermines state regulatory powers in significant ways. His filing argued the decision removes a multibillion-dollar wagering market from state jurisdiction.
New Jersey gaming officials had previously issued cease-and-desist orders to both Kalshi and Robinhood in March 2025. Those notices alleged the companies were facilitating illegal sports wagering in violation of state statutes.
Following the unfavorable appellate outcome, the Supreme Court represents New Jersey’s remaining avenue for pursuing this legal challenge.
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