New Jersey has moved a revised prediction-market tax bill forward that would impose a 9% surtax on operators’ income from event contracts. The measure is a pared-back version of an earlier draft that tried to treat prediction markets more like sportsbooks.
The Senate Committee Substitute for S4447 was adopted on June 28 and is sponsored by Sen. Nicholas P. Scutari and Sen. Paul A. Sarlo. Sports Betting Dime reported that the Senate Budget and Appropriations Committee later approved the amended bill by a 9-4 vote.
Under the substitute, prediction-market operators would pay a 9% surtax on allocated taxable net income under the corporation business tax or on gross income under the gross income tax, as applicable. The levy would sit on top of existing state business and income taxes, and the bill bars credits against the surtax except for limited offsets tied to installment payments, extension-related estimated payments, or prior overpayments.
The bill defines a prediction market broadly as a physical or electronic system that lets participants take speculative positions on the outcome of future events. Those events include federal, state and local elections, popular culture, sports, games of skill, certain card, dice or electronic games, and civil or criminal legal actions.
The substitute also says the act would take effect immediately, with one section reaching back to privilege periods beginning on or after July 1, 2025, and another applying to taxable years beginning on or after Jan. 1, 2026. A fiscal estimate dated July 2 projected that the surtax would increase state revenue by $10.3 million to $15.3 million in FY 2027.
The fiscal note said the projection rests on a simplifying assumption that prediction-market growth is unrelated to the performance of online and retail sportsbooks and brick-and-mortar casinos. It also warned that if prediction markets draw business away from other wagering and gaming licensees, state collections from those operators could fall.
The measure is much less restrictive than the original Senate draft. According to Sports Betting Dime, the earlier version would have required operators offering sports event contracts to be licensed in New Jersey or to partner with a sports wagering licensee, and it would have carried a 19.75% tax rate plus a 10% surcharge.
That first draft also included self-exclusion and responsible-gaming requirements, along with bans on contracts tied to death, catastrophic events and political markets. The amended version drops the licensing requirement and removes the prohibitions on specific event contracts.
The wider backdrop is a fast-growing market that states are still trying to define. ECIKS.org reported that Kalshi and Polymarket had reached $60 billion in combined trading volume year to date in early July, after monthly volume climbed from under $5 billion in September 2025 to about $24 billion by April 2026.
That same report said an April 3rd Circuit ruling treated Kalshi’s sports wagering contracts as futures trades under federal authority and gave the Commodity Futures Trading Commission exclusive jurisdiction. It also said the CFTC proposed new rules in June, while Assembly Speaker Craig Coughlin said lawmakers would keep reviewing the proposal over the summer and into the fall.
