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New Jersey Senate President Nicholas Scutari has introduced legislation that would establish a regulatory framework for prediction markets, prohibit certain controversial markets, and impose new taxes on operators serving New Jersey residents.
Senate Bill 4447, introduced by Scutari and Sen. Paul Sarlo, seeks to regulate prediction markets while bringing athletic event contracts under a framework similar to the state’s New Jersey online sportsbooks.
The bill argues that prediction markets have increasingly offered products that resemble traditional sports wagering while avoiding state oversight.
According to the legislation:
“Prediction market operators offer ‘events contracts’ that allow participants to open a speculative position, and thereby stake money, on the outcome of events in what amounts to the functional equivalent of a wager.”
The bill further states that some operators are able to “offer wagers without the approval of the appropriate gaming authorities,” while paying lower taxes and avoiding state compliance requirements.
Bill would impose new taxes on prediction markets
Among the most significant provisions is a new tax structure for prediction market operators.
The legislation would impose a 10% surcharge on revenue generated from speculative positions opened by New Jersey residents on prediction markets. The surcharge would be paid quarterly and deposited into the state’s General Fund.
Athletic event markets would face even higher taxation.
Under the bill, revenue from sports-related prediction contracts would be subject to New Jersey’s existing 19.75% online sports wagering tax rate, plus an additional 10% surcharge.
The bill’s statement summarizes the proposal by noting:
“Athletic events markets will be taxed at the same rate as sports wagering, plus a 10% surcharge. A 10% surcharge will also be applied to all other prediction markets, in addition to otherwise applicable business taxes and fees.”
Sports event contracts would require state licensing
The legislation would allow athletic event markets to operate in New Jersey but only under strict regulatory requirements.
Operators would either need to hold a sports wagering license or obtain a newly created athletic event market operator license and partner with a licensed sportsbook.
The bill establishes a $5 million initial licensing fee for athletic event market operators, with renewal costs to be determined annually by the Division of Gaming Enforcement.
The DGE would oversee athletic event markets and implement regulations covering age verification, responsible gambling, self-exclusion programs, deposit limits, and advertising requirements. Participants would need to be at least 21 years old.
The legislation also requires operators to disclose the sources used to settle markets and implement measures to detect fraud, insider trading, and market manipulation.
Political, death, and catastrophe markets prohibited
While the bill would permit athletic event markets, it would prohibit several other categories of prediction contracts.
Specifically, operators would be barred from allowing participants to open positions on political markets, death markets, and catastrophic event markets.
Operators violating the law could face court injunctions, and those that continue operating in violation of a court order would be subject to civil penalties of $1 million per day.
Second prediction market bill introduced this year
Scutari’s proposal is the second prediction market bill introduced in the New Jersey Legislature this year. Sen. Shirley Turner previously introduced legislation that would prohibit certain prediction markets and require sports-related event contracts to comply with the state’s sports wagering laws.
Scutari’s measure would create a comprehensive framework to regulate, license, and tax operators while allowing athletic event markets to continue under state oversight.
The legislation has been referred to the Senate Budget and Appropriations Committee.
