LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, No. 5336
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JULY 2, 2026
SUMMARY
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Synopsis: |
Establishes surtax on certain incomes derived from operation of prediction markets.
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Type of Impact: |
State revenue increase. |
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Agencies Affected: |
Department of the Treasury. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2027 |
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State Revenue Increase |
$10.3 million to $15.3 million |
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· The Office of Legislative Services (OLS) estimates that this bill will increase State revenue from a new surtax on prediction market operators between $10.3 million and $15.3 million in FY 2027.
· Owing to a lack of detailed industry data, this estimate makes the simplifying assumption that prediction market growth is uncorrelated with the financial performance of – and therefore also State revenue collection from – online and retail sportsbooks and brick and mortar casinos. If, however, the growth in prediction markets occurs at the expense of the other wagering and gaming licensees, there would be a reduction in the State revenue collections from those licensees.
BILL DESCRIPTION
This bill establishes a surtax of 9 percent on allocated taxable net income received by prediction market platforms currently operating in New Jersey, levied in addition to other taxes such as the Corporation Business Tax. It also establishes a corresponding 9 percent surtax on the gross income of partners or shareholders in certain types of corporations, if such income is derived from the operation of prediction market platforms, to be levied in addition to the Gross Income Tax.
Under the bill, prediction markets are defined as any physical or electronic system that allows participants to open a speculative position on the outcome of future events, in a bid-ask format, and in any other form regardless of the mechanisms or structures used for opening speculative positions on future events. “Future events” include the outcome or occurrence of a federal, state, or local election, events in popular culture, an athletic event or game of skill, any game played with cards, dice, equipment, or any mechanical or electronic device machine, and legal actions. The bill does not distinguish the types of speculative positions, and the surtax would be applied uniformly on incomes derived from all prediction markets handling speculative positions on applicable future events as defined by the bill.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS projects that this bill will increase State revenue from new surtaxes on prediction market operators between $10.3 million and $15.3 million in FY 2027.
The estimate does not include subsequent years for two reasons: first, prediction markets constitute a new industry whose trajectory is subject to considerable uncertainty; and second, the influx of users during the 2026 World Cup represents a one-time market boost that is unlikely to recur in future years, at least not at a comparable magnitude, thereby rendering accurate estimation of future revenue generation less reliable.
Owing to a lack of detailed industry data, this estimate makes the simplifying assumption that prediction market growth is uncorrelated with the financial performance of – and therefore also State revenue collections from – online and retail sportsbooks and brick and mortar casinos. If, however, the growth in prediction markets occurs at the expense of the other wagering and gaming licensees, there would be a reduction in State revenue collections from those licensees.
As an overarching caveat, the OLS’s projections depend on the quality of underlying data and the accuracy of technical assumptions regarding the total prediction market revenue. No publicly available regulatory reports or operator disclosures on this subject were identified. Available information appears to be derived primarily from industry commentary and third-party calculations from transaction volume and fee structure of each platform.
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Section: |
State Government |
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Analyst: |
Assistant Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).