New Jersey is pondering whether it should ask the nation’s highest court to have a say on prediction market companies and the legality of the sports services that they offer, with emphasis on their controversial sports betting options.
While actively looking into this option, the Garden State is also considering imposing taxes on the very same companies it wishes to eradicate from the market.
Writ of Certiorari
The New Jersey Attorney General’s Office filed the necessary paperwork with the US Supreme Court (SCOTUS) on June 26, looking to extend the deadline for asking the court to accept the case.
In April, a federal appeals court decided not to rule in favor of New Jersey’s attempt to stop Kalshi, Polymarket and similar platforms from operating within state borders.
Jeremy Feigenbaum, New Jersey’s solicitor general, called the matter “tremendously important”, explaining that the state was considering a formal request, also known as a “writ of certiorari” for SCOTUS to hear the case.
“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,” believes Feigenbaum.
The solicitor general is looking to file an official petition with SCOTUS by September 4, the deadline for the requested extension.
Upcoming 9% Tax on Prediction Markets?
Last weekend, a particularly interesting bill that would apply a 9% tax on prediction market operators received a first green light in the New Jersey Legislature.
For the time being, the federal government is allowing prediction companies to accept bets on the results of sporting events, while they are severely criticized by the traditional gambling industry, which claims the activity translates to illegal and untaxed forms of sports betting.
New Jersey has joined a long list of US states attempting to ban Kalshi, which quickly sued the state in return.
The prediction company won the legal battle in April, when the 3rd Circuit Court of Appeals decided to block the state from shutting down Kalshi’s sports prediction markets in New Jersey.
Kalshi’s chief executive officer, Tarek Mansour, called it “a big win for the industry and millions of users.”
The new taxation bill, backed by Senate President Nicholas Scutari and Senator Paul Sarlo, D-Bergen, would be added to the state’s current corporation business tax and gross income tax, possibly boosting state revenue by up to $15.3 million in 2027, as per the Office of Legislative Services.
During its yearly presentation on nationwide casino revenue in February, the American Gaming Association reiterated its firm stance against prediction markets.
During the same month, State Senator Shirley Turner introduced a bill, not yet enacted, looking to ban all unregulated prediction company activity in New Jersey. The bill would also force operators offering contracts on sporting events to comply with current state laws.