New Jersey Moves to Impose 9% Tax on Prediction Markets

New Jersey lawmakers are advancing a bill that would impose a 9% tax on gross income generated by prediction market operators. 

The revised bill – S4447 – is a watered-down version of an earlier one that required prediction market operators to be licensed, with restrictions on the types of event contracts that could be offered in the state, along with a higher tax rate. The New Jersey Senate Budget and Appropriations Committee approved the amended version by a 9-4 vote last week.

Revised Bill Advances

The bill would allow the state to tax operator’s fees, commission or other revenue generated from the market, not from the total volume of event contracts traded.

Commodity Futures Trading Commission-regulated prediction market like Kalshi can legally operate in New Jersey, offering event contracts, including those tied to sports-related events like the World Cup, and elections.

Tax Targets Operator Revenue

New Jersey has one of the largest and most mature regulated igaming markets in the world, with USD $2.91 billion in digital casino revenue in 2025, a 22% increase compared to 2024, and USD $1.15 billion in revenue that came in from online sports betting, an 8.2% year-over-year increase. Over 95% of all sports wagers in the state are placed online rather than at retail sportsbooks.

More specifically, the original Senate bill called for prediction market operators offering sports event contracts to be licensed similar to a sports betting operator, and taxed at the same rate. A 10% surcharge would have been applied to all other event contracts. The state tax rate on regulated sports betting GGR is 19.75%.

Market Size Remains Unknown

There were other components of the original bill that were cut out of the amended version, such as prohibiting event contracts covering political markets and catastrophic events, plus the requirement for operators to offer self-exclusion.

It’s tough to peg the gross income generated from federally regulated prediction markets like Kalshi and Polymarket. Those companies do not report state-by-state trading volume and revenue reports, unlike licensed sportsbooks, which disclose monthly handle and revenue figures.

According to the New Jersey’s Office of Legislative Services, if the bill is signed into law, the new tax is estimated to bring in $10.3 million and $15.3 million in tax revenue for the state in a fiscal year.