Establishes surtax on certain incomes derived from operation of prediction markets.*
What changed between versions
All regulatory provisions were removed: prohibitions on death markets, catastrophic event markets, and political markets; the athletic event market operator licensing system (including the $5 million initial license fee); Division of Gaming Enforcement regulatory authority; Attorney General enforcement powers with $1 million per day penalties; responsible gaming requirements; public awareness campaign; and all ethics restrictions on state officers, local government employees, legislators, candidates, and campaign staff.
A 9 percent surtax is imposed on allocated taxable net income of prediction market operators under the Corporation Business Tax Act (C.54:10A), effective for privilege periods beginning on or after July 1, 2025. No credits are allowed against this surtax except for installment payments, estimated payment extensions, or prior overpayments.
A 9 percent surtax is imposed on gross income received by individual taxpayers from the operation of a prediction market operator under the New Jersey Gross Income Tax Act (N.J.S.54A), effective for taxable years beginning on or after January 1, 2026. For S corporations and partnerships, the surtax applies to each shareholder's net pro rata share or partner's distributive share.
The definition of 'prediction market operator' was expanded to include any person who owns, operates, or controls a digital distribution service, platform, online portal, or application store where a prediction market may be accessed, and to include any business entity subject to tax under the corporate or gross income tax acts. A new definition of 'future events' was added covering elections, popular culture, athletic events, games of chance, and legal actions.
The bill now takes effect immediately upon enactment, with the corporate surtax applying retroactively to privilege periods beginning July 1, 2025, and the individual surtax applying to taxable years beginning January 1, 2026. The original bill had a 30-day delayed effective date.
All enforcement mechanisms were removed, including the Attorney General's ability to seek injunctions against non-compliant operators, the $1 million per day civil penalty for continued operation after an injunction, criminal penalties for operating without approval, and the fourth-degree crime penalties for ethics violations by public officials and candidates.
