New Jersey Bill Would Force Kalshi to Hold a Sports License and Pay 29.75% on Event Contracts

New Jersey has stopped trying to ban prediction markets and started trying to tax them. Senate Bill 4447, introduced June 16 by Senate President Nicholas Scutari (D-22) and budget committee chair Paul Sarlo (D-36), would require operators like Kalshi to hold a state sports-betting license before offering sports event contracts to New Jersey residents, and it would tax those contracts at the same 19.75% online sportsbook rate plus an additional 10% surcharge, a combined burden near 29.75%. The bill assigns oversight to the Division of Gaming Enforcement, the same agency that regulates Atlantic City and the state's record-setting online casino and sportsbook market. It now sits in the Senate Budget and Appropriations Committee with no hearing scheduled.

The timing matters. On April 6, 2026, the U.S. Court of Appeals for the Third Circuit affirmed a preliminary injunction barring New Jersey from enforcing its gambling laws against Kalshi, holding 2-1 that the company's sports event contracts are "swaps" under the Commodity Exchange Act and that federal law likely preempts state regulation. Judge David Porter wrote the opinion, joined by Chief Judge Michael Chagares, with Judge Jane Roth dissenting. It was the first federal appellate ruling that the CFTC's jurisdiction over sports-related contracts traded on a registered exchange is likely exclusive. Scutari's response is to stop fighting the federal characterization and instead bring the operators inside the state's existing licensing tent, where they would pay what sportsbooks pay. That is a different bet than the one Kentucky's attorney general placed by suing Kalshi, Polymarket and VGW, and a different one again from the dozen states pushing outright bans.

What S4447 actually requires

The bill gives operators two routes onto the legal market. Either they obtain a New Jersey sports-betting license directly, or they license as an "athletic event market operator" and partner with an existing sports-wagering licensee. The athletic event market operator path carries an initial licensing fee of $5 million, with annual renewals set by regulators. Players must be 21 or older, matching the state sportsbook floor.

The compliance demands track gaming rules rather than securities rules. Operators would have to disclose the source of information used to settle each market, take practical steps to limit manipulation, insider trading and fraud, report suspicious activity to the Attorney General, and run self-exclusion and responsible-gaming programs. The bill carves out specific criminal exposure for public officials: insider trading by a state or local official tied to these markets would be a fourth-degree crime carrying up to 18 months in prison and a $10,000 fine. And it draws hard lines around what cannot be listed at all. Contracts on political elections, on death, and on catastrophic events including war, terrorism and natural disasters are prohibited, the categories lawmakers tie to insider-information and manipulation risk.

Why an industry that won in court still has a problem

Kalshi is not a fringe operator anymore, and that is the point. The company raised $1 billion in a Series F in May 2026 at a $22 billion valuation led by Coatue, up from an $11 billion valuation in December 2025 and roughly $2 billion nine months before that. Sports has driven the surge: Kalshi traded about $10.44 billion in sports event contracts in May 2026 alone, and weekly volume has run near $1 billion. Polymarket, its main rival, crossed $10 billion in monthly volume for the first time in March 2026 and posted roughly $26.2 billion in Q1 2026 trading, up more than 90% quarter on quarter. Money at that scale moving through CFTC-registered venues, rather than DGE-licensed books, is exactly the leakage New Jersey is trying to price.

For state-licensed operators and the affiliates who feed them, the competitive math is plain. A New Jersey sportsbook pays the 19.75% online tax, posts licensing fees, and runs full responsible-gaming compliance. A prediction-market operator offering economically similar action on the same NFL spreads has, since April, been free of all of it inside the state. S4447 tries to close that gap by making the contract operator pay more than the sportsbook does: the sportsbook rate plus a 10% surcharge. Whether any operator accepts that bargain is the open question. Having just won a preemption ruling that says New Jersey cannot regulate them, Kalshi has little reason to volunteer for a 29.75% tax and a $5 million license. The bill's own teeth, a $1 million per day penalty for defying an injunction, only bite if New Jersey can first get an enforceable injunction past the Commodity Exchange Act, which is precisely what the Third Circuit said it likely cannot.

That tension is national, not local. On April 2, 2026, the CFTC sued Arizona, Connecticut and Illinois, asking courts to declare state gambling laws unconstitutional as applied to registered prediction-market exchanges. Arizona has filed criminal charges against Kalshi executives. The Ninth Circuit heard consolidated arguments on April 16 in cases involving Kalshi, Robinhood and Crypto.com, and a contrary ruling there would open a circuit split that pushes the fight toward the Supreme Court. New Jersey is one of at least a dozen states, alongside California, Georgia, Hawaii, Kentucky, Minnesota, New York, Tennessee, Virginia and Vermont, that have moved on prediction markets this year. Minnesota's parallel licensing-and-tax bill, SF 4760, already drew immediate challenges from Kalshi and the CFTC on the same exclusive-jurisdiction theory. New Jersey collected $627.1 million in total gaming revenue in May 2026, including a record $276.2 million online casino month, and its lawmakers would rather tax the new entrants than watch sports volume keep migrating to venues the state cannot touch. The bill has no committee hearing on the calendar.