New Jersey SB 4447 Advances With Prediction Market Tax

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Thu Jul 02, 2026, 11:00 am ET

Read Time: 4 minutes

New Jersey SB 4447 Advances With Prediction Market Tax

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New Jersey lawmakers have scaled back Senate Bill 4447 as they continue efforts to regulate prediction markets after recent courtroom setbacks involving Kalshi.

The revised proposal reflects a shift away from broad restrictions and toward a framework focused on licensing, consumer protection, and taxation.

The bill has advanced alongside companion legislation in the General Assembly, signaling growing legislative support for regulating prediction markets within the state's broader New Jersey gambling landscape.

Lawmakers also hope the proposal will establish clear rules for operators while generating additional tax revenue if prediction markets continue expanding.

The latest version of SB 4447 arrives as several states debate how to address federally regulated prediction markets. At the same time, regulators continue weighing the relationship between state gaming laws and federal oversight. 

The recent development creates fresh uncertainty for US online sportsbooks and event contract operators alike.

New Jersey Lawmakers Scale Back SB 4447 to Focus on Oversight and Taxation

Introduced by Senate President Nicholas Scutari in June, SB 4447 originally proposed a broad regulatory structure for prediction markets. However, lawmakers have since narrowed the legislation following legal developments surrounding Kalshi's sports event contracts.

Rather than attempting to prohibit prediction markets outright, the revised measure focuses on regulating authorized operators through the New Jersey Division of Gaming Enforcement (DGE). 

The proposal would require operators to obtain state approval, implement consumer protection measures, verify customer identities, and maintain safeguards against fraud and market manipulation.

Tax Treatment on Prediction Market Revenue

The legislation also introduces a 10% surcharge on prediction market revenue. However, the tax treatment differs depending on the type of market offered. General prediction markets, including contracts tied to weather or economic indicators, would pay only the 10% surcharge.

Sports-related event contracts would face a significantly higher burden. Under SB 4447, the 10% surcharge would be added to New Jersey's existing 19.75% online sports wagering tax. This creates a combined effective tax rate of 29.75%. 

Lawmakers included the provision to ensure prediction market operators do not gain a tax advantage over established US online sportsbooks such as FanDuel and DraftKings.

Meanwhile, lawmakers retained provisions banning contracts tied to elections, terrorist attacks, deaths, natural disasters, and other catastrophic events. 

The proposal also bars elected officials, candidates, campaign staff, and certain government employees from participating in political prediction markets to reduce conflicts of interest.

Supporters argue the revised framework better aligns with New Jersey's existing gaming regulations. They also believe that it preserves safeguards for consumers and market integrity.

Lawmakers Revise Proposal After Kalshi Secured Preliminary Injunction

The changes to SB 4447 follow Kalshi's legal victory against the New Jersey Division of Gaming Enforcement.

Earlier this year, the US Court of Appeals for the Third Circuit upheld a preliminary injunction preventing the DGE from enforcing its cease-and-desist order against the federally regulated prediction market operator.

In its opinion, the court concluded that federal law governs Kalshi's sports-related event contracts because they trade on a Commodity Futures Trading Commission-designated exchange.

"New Jersey frames the issue broadly (regulating all sports gambling) rather than narrowly (regulating trading on federally designated contract markets)," read the Third Circuit decision. 

"The text of the [Commodity Exchange Act] suggests that the narrow framing is the better reading."

The court further explained the limits of state authority over federally approved event contracts,

"The Act preempts state laws that directly interfere with swaps traded on DCMs [designated contract markets like Kalshi]. Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction."

Following that ruling, New Jersey lawmakers shifted their focus toward establishing a licensing and taxation framework. This was a pivot to pursuing direct restrictions that could conflict with federal law.

The revised approach mirrors broader efforts by several states to balance consumer protections with evolving federal oversight of prediction markets.

What Comes Next for SB 4447?

Although SB 4447 has gained momentum, it must still complete several legislative steps before becoming law.

Both the Senate and General Assembly must approve identical versions of the legislation. If lawmakers pass matching bills, the proposal will head to Governor Phil Murphy for consideration.

The governor has three options. First, the governor can sign the bill into law. Second, he can allow it to become law without his signature. Third, he can issue a veto that lawmakers could attempt to override.

If enacted, SB 4447 would establish one of the nation's first comprehensive state frameworks governing prediction markets. It will also be the first law to introduce a dedicated tax structure for operators.

The legislation would also ensure sports-related prediction markets face tax rates comparable to traditional sportsbooks. 

Such initiatives reinforce lawmakers' efforts to create a level playing field within the evolving New Jersey gambling industry.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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