New Jersey lawmakers have introduced legislation that would create a state regulatory system for prediction markets, establish new taxes on operators, and require licensing for sports-related event contracts.
Senate President Nicholas Scutari and Sen. Paul Sarlo filed Senate Bill 4447, a measure that seeks to bring prediction market activity under state oversight while allowing certain sports-related contracts to continue operating under a regulated framework. The proposal arrives as states, prediction market operators and federal regulators continue to dispute who has authority over the rapidly expanding sector.
According to the legislation, prediction market companies increasingly offer products that resemble sports wagering while operating outside the requirements imposed on traditional gaming operators.
According to PlayNJ, the bill states: “Prediction market operators offer ‘events contracts’ that allow participants to open a speculative position, and thereby stake money, on the outcome of events in what amounts to the functional equivalent of a wager.”
Lawmakers argue that some operators currently “offer wagers without the approval of the appropriate gaming authorities,” while avoiding regulatory obligations and paying lower tax rates than licensed gaming businesses.
Proposed Framework Would License Sports Event Markets
Under the legislation, companies offering sports-related event contracts in New Jersey would need to secure authorization through the state. Operators could either obtain a sports wagering license or apply for a newly created athletic event market operator license and partner with an existing sportsbook license holder.
The proposal would place athletic event markets under the supervision of the Division of Gaming Enforcement (DGE), which would be responsible for developing regulations covering consumer protections and market integrity.
“The bill requires all prediction markets to meet basic standards, including that the prediction markets disclose the source of information used to settle a market and take practical steps to limit potential manipulation, insider trading, or fraud in violation of State law,” Scutari and Sarlo wrote in the bill.
The legislation establishes a minimum participation age of 21 and requires operators to maintain responsible gaming measures, including self-exclusion programs. Regulators would also oversee age verification procedures, advertising practices and deposit controls.
A new licensing structure would accompany the regulatory framework. Athletic event market operators would face an initial licensing fee of $5 million, while annual renewal costs would be determined by regulators.
Tax Plan Includes Surcharge on Prediction Market Revenue
One of the bill’s central components is a new taxation model aimed at prediction market operators serving New Jersey residents.
Revenue generated from speculative positions opened by New Jersey participants would be subject to a 10% surcharge. Operators would pay the surcharge quarterly, with funds directed to the state’s General Fund.
Sports-related prediction contracts would face additional taxation. Revenue from athletic event markets would be taxed at New Jersey’s existing online sports wagering rate of 19.75%, along with the proposed 10% surcharge.
The bill summarizes the approach by stating: “Athletic events markets will be taxed at the same rate as sports wagering, plus a 10% surcharge. A 10% surcharge will also be applied to all other prediction markets, in addition to otherwise applicable business taxes and fees.”
Supporters of the legislation describe the proposal as an effort to place prediction market operators on similar footing with licensed sportsbooks that already operate under state gaming laws.
Certain Markets Would Be Banned
While the bill would permit regulated athletic event markets, it would prohibit several categories of contracts entirely.
Political event contracts, death markets and markets tied to catastrophic events would not be allowed under the proposed framework. Operators that continue offering prohibited products could face court intervention and significant financial penalties.
The legislation authorizes the state attorney general to seek injunctions against operators that violate the law. Companies that continue operating after a court order would face civil penalties of $1 million per day.
Additional restrictions would apply to public officials and government employees. The measure prohibits state and local officers, employees, legislators and certain family members from participating in insider trading related to prediction markets.
The bill outlines criminal penalties for violations, stating: “A state or local officer or employee, or member of the legislature who violates this provision is guilty of a crime of the fourth degree. A crime of the fourth degree is punishable by imprisonment for up to 18 months, a fine of up to $10,000, or both. A member of their immediate family or another person who commits a violation at the direction of a state or local officer or employee, or member of the legislature is guilty of a disorderly persons offense. A disorderly persons offense is punishable by imprisonment for up to six months, a fine of up to $1,000, or both.”
Separate penalties would apply to unlicensed operators. The legislation states: “Any person who operates an athletic event market without approval of the division will be guilty of a crime of the fourth degree will be subject to a fine of not more than $25,000 and, in the case of a person other than a natural person, to a fine of not more than $100,000.”
Part of a Broader National Debate
Scutari’s proposal marks the second prediction market bill introduced in New Jersey this year. Earlier legislation sponsored by Sen. Shirley Turner sought to require sports-related event contracts to comply with state sports betting laws while restricting certain prediction markets.
The latest measure goes further by creating a complete licensing, taxation and regulatory structure. The bill has been referred to the Senate Budget and Appropriations Committee and has not yet been scheduled for a hearing.
Its introduction comes as New Jersey continues to challenge the boundaries of federal and state authority over prediction markets. In April, a federal appeals court ruled that the state could not prevent Kalshi from operating within New Jersey.
The proposal also arrives during an ongoing federal rulemaking process at the Commodity Futures Trading Commission (CFTC), which is reviewing issues related to event contracts, insider information concerns and public-interest standards.
Other states have pursued similar approaches. Illinois recently adopted a regulatory and tax structure for prediction markets, while Kentucky enacted a 14.25% tax that has already prompted litigation from prediction market groups. Minnesota became the first state to prohibit certain prediction markets after Gov. Tim Walz signed legislation earlier this year.
Legal challenges have followed those efforts. Kalshi and the CFTC have both challenged Minnesota’s law, arguing that the federal agency maintains exclusive jurisdiction over prediction markets. Observers expect New Jersey could face similar lawsuits if Senate Bill 4447 becomes law.