New Jersey Moves to Impose 9% Surtax on Prediction Market Platforms

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 draft. The original legislation would have required prediction market operators to be licensed, placed strict limits on the types of event contracts offered in the state, and imposed 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 legislation allows the state to tax an operators’ fees, commissions, or other generated revenue rather than the total volume of event contracts traded. Commodity Futures Trading Commission (CFTC)-regulated prediction markets like Kalshi can legally operate in New Jersey, offering event contracts tied to elections and sports-related events like the World Cup.

Contextualizing NJ’s Massive Gaming Market

New Jersey boasts one of the largest and most mature, regulated iGaming markets in the world. The state pulled in $2.91 billion in digital casino revenue in 2025 (a 22% increase over 2024) alongside $1.15 billion 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.

By comparison, the original Senate bill treated prediction markets much more like traditional sportsbooks.

It called for prediction market operators offering sports event contracts to be licensed similarly to sports betting operators and taxed at the same 14.25% or 19.75% rate, while applying a 10% surcharge to all other event contracts.

Market Size and Revenue Projections

Several other restrictive components of the original bill were cut from the amended version, including a ban on contracts covering political markets or catastrophic events, and a requirement for operators to offer user self-exclusion.

Because federally regulated prediction markets like Kalshi and Polymarket do not report state-by-state trading volumes or revenue figures, pinning down their exact gross income remains difficult.

This contrasts sharply with licensed sportsbooks, which must publicly disclose monthly handle and revenue data.

Despite the lack of baseline data, New Jersey’s Office of Legislative Services estimates that if the bill is signed into law, the new tax will generate between $10.3 million and $15.3 million for the state per fiscal year.