SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE COMMITTEE SUBSTITUTE FOR

SENATE, No. 4447

STATE OF NEW JERSEY

DATED: JUNE 28, 2026

      The Senate Budget and Appropriations Committee reports favorably a Senate Committee Substitute for Senate Bill No. 4447.

      As substituted by the committee, this bill establishes a surtax on certain incomes derived from operation of prediction markets.

      Under the bill, prediction market operators will be required to pay a 9 percent surtax on allocated taxable net income under the Corporation Business Tax or on the gross income derived from the operation of a prediction market operator under the Gross Income Tax, as applicable.  This surtax will apply in addition to the Corporation Business Tax and Gross Income Tax, as applicable, being paid by prediction market operators under current law.  No credits will be allowed against this surtax liability.

      As defined by the bill:

      “Bid-ask format” means a format in which parties submit offers to buy positions at a specific price or range of prices and offers to sell positions at a specific price or range of prices, with market prices determined through the matching of these offers.

      “Future events” means the outcome or occurrence of: a federal, state, or local election; events in popular culture, including but not limited to awards and the date a piece of entertainment will be released; an athletic event or game of skill, or portions thereof or individual performance statistics therein; any game played with cards, dice, equipment, or any mechanical or electronic device machine; or legal actions, including but not limited to a civil or criminal suit, grand jury proceeding, jury trial, settlement, plea deal, or conviction.

      “Prediction market” means 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. 

      “Prediction market operator” means a board of trade or other person, including any affiliate of the person, that operates a prediction market, including but not limited to, a person that owns, operates, or controls a digital distribution service, digital distribution platform, online portal, or application store where a prediction market may be accessed.  A prediction market operator includes any business entity or combined group that is subject to tax as provided in the Corporation Business Tax person or a business entity that is subject to tax under the New Jersey Gross Income Tax Act, as applicable. 

      “Speculative position” means a financial commitment made by a participant in a prediction market.  In prediction markets, participants will frequently open a speculative position by purchasing what is known as an “event contract.”

FISCAL IMPACT:

      The Office of Legislative Services estimates that this bill will increase State revenue from a new surtax of 9 percent on prediction market operators by a range from $10.3 million to $15.3 million in FY2027.  This estimate assumes that the bill will be in effect for the entire fiscal year.

      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.