TLDR
- New Jersey Senate and Assembly committees approved companion bills placing a 9% surtax on prediction market operators.
- The Senate voted 9-4 and the Assembly voted 10-4, sending the bills to second reading.
- The new version drops an earlier plan for a 29.75% tax rate and a licensing system.
- The state expects the tax to bring in $10.3 million to $15.3 million in fiscal year 2027.
- New Jersey’s Attorney General is asking the Supreme Court for more time to challenge a ruling that favored Kalshi.
New Jersey lawmakers took a step toward taxing prediction market platforms this week. On June 28, two legislative committees approved companion bills aimed at these operators.
The Senate Budget and Appropriations Committee passed Senate Bill 4447. The Assembly Budget Committee passed a matching bill, Assembly Bill 5336.
Both votes came with committee substitutes, meaning the bills were rewritten before passing. The Senate vote was 9-4, and the Assembly vote was 10-4.
The bills now head to a second reading in each chamber. That is the next step before a full floor vote.
The core of the plan is a 9% surtax on gross income earned by prediction market platforms each tax year. This would apply on top of existing state corporation and income taxes.
Senate Budget Chairman Paul Sarlo called the measure a “first step” toward regulating this industry. He said the goal is to bring these platforms in line with rules that already apply to sportsbooks.
The Office of Legislative Services estimates the tax could raise between $10.3 million and $15.3 million for the state in fiscal year 2027.
A Bill Scaled Back From Its Original Form
The bills passed this week look very different from their first drafts. Lawmakers removed most of the tougher rules that were in the original text.
The earlier versions treated sports event contracts as a form of sports betting. They called for a licensing system through the state’s Division of Gaming Enforcement.
That draft also proposed a 29.75% tax rate. This number combined the state’s existing 19.75% sportsbook tax with a new 10% surcharge.
Operators would have needed a state license to legally offer contracts. Offering them without one could have led to criminal charges under the original plan.
The Attorney General’s office would have been able to seek court orders against violators. Fines could have reached $1 million per day under that draft.
Also removed were proposed bans on contracts tied to deaths, disasters, or elections. What remains now is a simpler 9% surtax, without the licensing rules or bans.
New Jersey May Turn to the Supreme Court
New Jersey is not only pursuing new taxes. The state is also weighing a Supreme Court challenge over prediction markets.
The Attorney General’s office has filed paperwork asking for more time to submit a petition. The new deadline for that filing is September 4.
This follows an April ruling from the U.S. 3rd Circuit Court of Appeals. That court blocked New Jersey’s effort to shut down Kalshi and similar platforms.
The appeals court found that sports prediction contracts fall under the Commodity Exchange Act. That law places regulation under the Commodity Futures Trading Commission, not individual states.
Solicitor General Jeremy Feigenbaum argued the ruling carries wide consequences for state authority. He wrote that it would place a multibillion-dollar sports wagering industry outside the reach of state laws.
New Jersey’s gaming regulators had already sent cease-and-desist letters to Kalshi and Robinhood back in March 2025. Those letters accused the platforms of offering illegal sports bets under state law.
With the appeals court ruling against New Jersey, the Supreme Court now stands as the state’s next option in this fight.
