New Jersey lawmakers are considering imposing a 9% tax on prediction markets. Outlined in a new bill, the measure would effectively recognize the Commodity Futures Trading Commission (CFTC) as the prediction markets control body, while still allowing the state to benefit from the offering of such products.
New Jersey Envisions a 9% Prediction Markets Tax Rate
New Jersey lawmakers just submitted a new bill in hopes of capitalizing on the growing prediction markets sector. S4447, which seeks to introduce a 9% tax on prediction market gross income, is a toned-down version of an earlier proposal.
For reference, the earlier version of the bill sought to introduce a licensing system for prediction markets and restrict the types of event contracts that prediction market companies can offer. In addition to that, the previous legislation envisioned a higher tax rate than the current one.
The amendments to S4447 were officially approved by a 9-4 vote at the New Jersey Senate Budget and Appropriations Committee. The latest version effectively recognizes the CFTC as the prediction markets regulator, but places a tax burden on event contract companies that wish to legally operate in the Garden State.
While prediction markets do not report their financials on a state-by-state basis, New Jersey’s Office of Legislative Services experts believe that the tax rate outlined in S4447 would bring in between $10.3 million and $15.3 million in annual tax revenue.
It should be noted that the amended version of S4447 also dropped wording that would have required prediction market operators to offer self-exclusion options, similar to those of gambling operators.
New Jersey Considers Banning Online Microbets
In other New Jersey-related news, the state also submitted a bill that would restrict online microbetting, while still allowing it in physical casinos and racetracks. This came amid growing concerns about the harm associated with online microbets.
The bill in question advanced out of a key Assembly committee earlier this month. It is now heading for a full-chamber vote, after which it would move to the Senate. If approved there too, the bill would move to the governor’s desk.
Speaking of banning types of bets, the Major League Baseball Players Association recently asked lawmakers to outlaw the highly controversial prop bets tied to an individual player’s performance. Opponents of prop bets claim that such wagers cause disgruntled bettors to harass or even threaten athletes.