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New Jersey has filed a new bill that would bring prediction markets under much scrutiny. We’re talking about introducing new taxes, a more stern regulation, and a whole lot of questions about who actually gets to regulate these platforms.
The proposal, Senate Bill 4447, was introduced by Senate President Nicholas Scutari alongside Senator Paul Sarlo. The main game of it? It argues that prediction market operators have been offering products that look a lot like traditional wagers while avoiding many of the rules that licensed sportsbooks have to follow.
The bill reads in part: “This bill prohibits the operation of certain prediction markets in this state and authorizes the operation of athletic event markets operating in compliance with sports wagering regulations.”
Senate Bill 4447 Seeks to Close Regulatory Gaps
The biggest headline grabber is money. Lots of it.
The bill proposes imposing a 10% surcharge on prediction markets. Operators would have to pay that surcharge quarterly, with the funds flowing directly into the state’s General Fund.
If the contracts involve athletic events, the tax bill gets even bigger.
Sports-related prediction contracts would be subject to New Jersey’s existing online sports betting tax rate of 19.75 percent. On top of that, they would also face the additional 10% surcharge.
In other words, prediction markets would finally be asked to contribute to the state’s purse.
Operators Would Need Sports Betting Licenses or Partnerships
The bill states that prediction market platforms would need either a sports betting license or a partnership with an already licensed sportsbook.
Only adults aged 21 and above could participate, and operators would have to offer self-exclusion and responsible gaming tools.
The Division of Gaming Enforcement would oversee the market, while anyone caught operating without approval could face fines of up to $25,000 for individuals and $100,000 for businesses.
Bill Limits Who Can Participate in Prediction Markets
The bill does not simply focus on taxes.
It also draws lines around what kinds of contracts should be allowed in the first place.
Certain public officials and employees would be prohibited from trading in or benefiting from prediction market contracts, an attempt to address growing concerns about insider information and conflicts of interest.
And this one we all know will likely fly, because platforms like Kalshi are already placing multi-year bans on insider traders.
On Thursday, June 18, Republican House member Bryan Steil introduced a bill that will ban congressional lawmakers from wagering on prediction market platforms. The bill also extends the ban to family members of these politicians.
New Jersey is also taking it up a notch by placing a fine of up to $10,000 or 18 months’ imprisonment for state or local officers, employees, or members of the legislature who participate in these markets. The bill also states that a violator could face both penalties at the same time.
For relatives of the aforementioned, the penalty is up to a $1,000 fine, six months’ imprisonment, or both.
And if you’re wondering what this means for bettors, well, for everyday users, nothing changes overnight.
The bill still needs to go through the legislative process before becoming law.
