New Jersey Lawmakers to Revisit Prediction Market Tax Bill This Fall After Summer Stall

New Jersey lawmakers are expected to revisit a proposal to tax prediction markets when the legislature returns in the fall, after the measure failed to reach floor votes before the summer recess. The bill would impose a 9% surtax on prediction markets’ net income to raise additional state revenue, and it had cleared budget committees in both chambers on party-line votes before stalling.

The pause comes as states across the country continue to wrestle with how to regulate and tax prediction markets, a fast-growing category whose legal status remains unresolved in multiple federal court cases.

Bill Sponsor Says Scope Concerns Need Ironing Out

Assembly Speaker Craig Coughlin, the bill’s prime sponsor in the Assembly, said lawmakers will continue reviewing the proposal through the summer after Senate amendments raised concerns about its reach. “We’re planning on looking at that over the summer and into the fall. I think there’s every chance we’ll pass something out. We’ll make sure it’s right,” Coughlin said, adding that revised Senate language sparked worries the bill could unintentionally touch markets beyond prediction platforms. “There was some notion that we might be affecting other things, like the stock market or something like that. Clearly that was never the intent,” he said.

An earlier draft would have applied a 10% surcharge to nearly all prediction market contracts, with sports-related contracts also subject to New Jersey’s 19.75% internet sports betting tax — a detail that has drawn close attention from sportsbook operators watching how states might treat competing prediction markets differently.

What It Could Mean for Bettors and Operators

Prediction market operators Kalshi and Polymarket continue to face legal challenges over sports-related contracts across the country. Polymarket’s deputy chief legal officer, Olivia Chalos, said the company believes state-level regulation efforts will likely face significant federal preemption challenges, arguing Polymarket operates as a CFTC-regulated exchange under exclusive federal jurisdiction.

The New Jersey Office of Legislative Services estimated the surtax could generate between $10.3 million and $15.3 million during the current fiscal year, while cautioning that future revenue projections remain uncertain given the industry’s youth. The office also noted the ongoing FIFA World Cup could temporarily lift prediction market activity, while warning the platforms could pull revenue away from licensed sportsbooks and casinos.

Atlantic City’s casino workers union, UNITE HERE Local 54, opposes the bill, with president Donna DeCaprio arguing that taxing prediction markets would legitimize platforms that let 18-year-olds participate despite the state’s 21-and-over gambling age. For sports bettors watching how New Jersey treats prediction markets differently than traditional sportsbooks like DraftKings, the fall session could bring clarity — or another round of delay.