N.J. lawmakers advance bill to tax prediction market operators Polymarket and Kalshi
New Jersey lawmakers advanced SB 4447, legislation that would impose taxes on prediction market operators and specifically names Polymarket and Kalshi as affected platforms. The nonpartisan Office of Legislative Services analyzed the measure's fiscal impact. The bill advances as states increasingly scrutinize the sector. Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed designated contract market, placing them under CFTC exclusive jurisdiction.
Polymarket and Kalshi must now price a third state tax regime into their U.S. expansion models, adding New Jersey to Illinois and Kentucky in a patchwork that fragments compliance costs. The 9% rate under earlier New Jersey proposals would undercut Illinois's 15% levy, but operators cannot lock in assumptions until the final text passes. Each new state framework weakens the CFTC preemption argument that exclusive federal jurisdiction should block state-level taxation of CFTC-licensed contracts.
Polymarket and Kalshi face a widening litigation map: they are already in federal court defending against Kentucky and New Mexico enforcement actions, and New Jersey's tax move invites additional states to layer fees rather than fight outright bans. Platforms without government-affairs teams in Trenton will struggle to shape amendments, and the fiscal-note process gives opponents a ready venue to demand higher rates or product restrictions before final passage.
New Jersey becomes the third state this quarter to impose a prediction-market-specific tax framework, after Illinois's 15% levy and the narrower Kentucky fee structure, as state legislatures race to capture revenue from CFTC-registered operators Polymarket and Kalshi before federal preemption litigation resolves.