Prohibits operation of certain prediction markets in this State; authorizes athletic event markets operating in compliance with sports wagering regulations; establishes public awareness campaign.

S3692

SENATE, No. 3692

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 24, 2026

Sponsored by:

Senator� SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

Senator� JOHN F. MCKEON

District 27 (Essex and Passaic)

Co-Sponsored by:

Senator Cryan

SYNOPSIS

���� Prohibits operation of certain prediction markets in
this State; authorizes athletic event markets operating in compliance with
sports wagering regulations; establishes public awareness campaign.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning the operation of prediction markets in this
State and supplementing Title 5 and Title 49 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� The Legislature finds
and declares that the 10th Amendment to the United States Constitution reserves
to the states those �police powers� necessary to ensure the health, safety, and
welfare of their citizens.� In accordance with these powers, the State has
historically regulated areas which, if left unrestrained, would threaten to
undermine the health, safety, and welfare of its citizens, including gambling.�
Recently, prediction markets, which are licensed and operate under the federal
Commodity Exchange Act, have begun offering �events contracts� that allow
participants to stake money on the outcome of events, including sports, in what
amounts to the functional equivalent of a wager, but without regard for the
State�s gambling or sports wagering frameworks.� This bill provides for the
rebalancing of State and federal interests as they relate to prediction markets
which, if left wholly unregulated, would deprive the State of its ability to
protect its citizens.

���� 2.��� As used in this act,
P.L.��� , c.��� (C.������ ) (pending before the Legislature as this bill):

���� �Athletic event market� means
a prediction market that enables a participant to open a speculative position
on the outcome of a sports event, as that term is defined in section 1 of
P.L.2018, c.33 (C.5:12A-10), or horse racing, as that term is defined in
section 1 of P.L.1940, c.17 (C.5:5-22).� �Athletic event market� shall not
include the opening of a speculative position on where, when, or whether a
sports event or horse race will occur at all.

���� �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.

���� �Catastrophic event market�
means a prediction market that enables a participant to open a speculative
position on an outcome that relates to war, state or national emergencies,
natural or human-made disasters, mass shootings, acts of terrorism, or public
health crises or the ancillary effects thereof.

���� �Death market� means a
prediction market that enables a participant to open a speculative position on
the death, assassination, or attempted killing of a person or group of persons,
or on mass casualty events.� �Death market� shall not include a prediction
market where the outcome could indirectly depend on a death, such as a lawful
prediction market which depends on a person engaging in some action where the
person�s death would naturally make the occurrence of such action impossible.

���� �Participant� means an
individual who is a resident of the State of New Jersey and opens a speculative
position on a prediction market.

���� �Political market� means a
prediction market that enables a participant to open a speculative position
that relates to an election for federal office in which voters in New Jersey
will participate, an election for any State office in New Jersey, including
elections for Governor and members of the State Legislature, or an election for
a county or municipal office, or school board or fire district, within the
State.� �Political market� shall not include the opening of a speculative
position on when or whether an election will occur at all.

���� �Prediction market� means a
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 platform�
means any platform or service that provides participants with the ability to
open speculative positions on the outcome of future events.

���� �Settlement source� means an
entity from which the prediction market platform obtains or sources information
for the purpose of determining the outcome of a market.

���� �Speculative position� means a
financial commitment made by a participant in a prediction market.

���� 3.��� a.� Nothing in this act,
P.L.��� , c.��� (C.������ ) (pending before the Legislature as this bill),
shall be construed to conflict with the �Commodity Exchange Act� (7 U.S.C. s.1
et seq.) or to prohibit a prediction market platform from allowing participants
to open a speculative position authorized pursuant to the Commodity Exchange
Act or the regulations promulgated thereunder.

���� b.��� Each prediction market
platform available and operating in this State, to the extent not inconsistent
with the Commodity Exchange Act and the regulations promulgated thereunder,
shall comply with the provisions of this act, P.L.��� , c.��� (C.������ ) (pending
before the Legislature as this bill), and any other applicable State law or
regulation.

���� 4.��� a.� Every operator of a
prediction market platform in this State shall maintain a comprehensive list of
all settlement sources that the operator of the prediction market uses to
determine the outcomes of the prediction markets and shall make this list readily
accessible to participants.

���� b.��� Each prediction market
platform shall display the settlement source for a given prediction market on
the same page of the Internet website or mobile application from which a
participant can open a speculative position on that specific prediction market.

���� c.���� No prediction market
shall be settled based on proprietary or confidential information.

���� 5.��� The operator of a
prediction market platform shall implement commercially reasonable and
technically feasible measures to detect and prevent any fraudulent or
manipulative conduct by participants or others, in accordance with such
regulations as the Attorney General may prescribe.� If the operator detects
potential manipulation, insider trading, or fraud in violation of State law, it
shall report such conduct to the Attorney General, or the Attorney General�s
designee for such matters.�

���� 6.��� A prediction market
platform shall not allow participants to open a speculative position on
catastrophic event markets, death markets, or political markets, consistent
with the prohibition set forth in R.S.19:34-24.

���� 7.��� a.� Whenever the
Attorney General, or the Attorney General�s designee, shall believe from
evidence satisfactory to them that the operator of a prediction market has
engaged in a persistent course of conduct in violation sections 4 through 6 of
this act P.L. , c. (C. )
(pending before the Legislature as this bill), the Attorney General, or the
Attorney General�s designee, may bring an action in a court of competent
jurisdiction seeking to issue an injunction, to enjoin and restrain the
continuation of such violation.

���� b.��� Whenever the operator of
a prediction market continues to operate in the State after an order is issued
pursuant to subsection a. of this section, such operator shall incur a civil
penalty of $1 million per day that such operator continues in violation of such
order.

���� c.���� Nothing in this section
shall be construed to preclude criminal prosecution arising under any other
law.

���� d.��� The fact that the
operator of a prediction market did not charge money or earn profit from such
activities in violation of this section shall not be a defense to a violation.

���� 8.��� a.� The operator of a
prediction market may allow participants to open a speculative position on an
athletic event market, provided that the prediction market operator either (1)
holds a sports wagering license issued pursuant to section 2 of P.L.2018, c.33
(C.5:12A-11), or (2) is licensed as a casino service industry enterprise
pursuant to section 92 of P.L.1977, c.110 (C.5:12-92) and has entered into an
agreement with a sports wagering licensee for the operation of an online sports
pool in accordance with the provisions of P.L.2018, c.33 (C.5:12A-10 et al.).�

���� b.��� Except as otherwise
provided by this act, P.L. , c. (C. ) (pending
before the Legislature as this bill), the Division of Gaming Enforcement in the
Department of Law and Public Safety shall have the authority to regulate
athletic event markets and shall ensure that any operator of an athletic event
market complies with the provisions of this act and, to the extent not
inconsistent, with the provisions of P.L.2018, c.33 (C.5:12A-10 et al.) and
P.L.1977, c.110 (C.5:12-1 et seq.).

���� c.���� No prediction market
platform shall allow participants to open a speculative position on athletic
event markets unless it has produced, to the satisfaction of the division,
information, documentation, and assurances concerning its financial background
and resources, including cash reserves, that are sufficient to demonstrate that
it has the financial stability, integrity, and responsibility to operate an
athletic event market.

���� d.��� The division shall
establish such rules and regulations as shall be necessary for the operation of
athletic event markets in this State which, insofar as practicable, shall
correspond to the regulatory framework applicable to online sports pools.� Such
rules and regulations shall include, but need not be limited to:

���� (1)� proper verification
procedures to ensure participants meet the minimum age requirements to engage
in sports wagering in this State;

���� (2)� acceptance of speculative
positions on a series of sports events;

���� (3)� maximum speculative
position which may be accepted by an operator from one participant on one
sports event;

���� (4)� method of accounting to
be used by the operator;

���� (5)� types of records which
shall be kept;

���� (6)� reporting of speculative
positions open to participants on athletic event market, speculative positions actually
opened by participants, and total number of participants on a monthly basis;

���� (7) use of credit and checks
by participants;

���� (8)� provision of promotional
credits, incentives, bonuses, complimentaries, or similar benefits designed to
induce participants to open a speculative position on an athletic event market;
and

���� (9)� adoption of responsible
gaming measures by operators, including:

���� (a)� a mechanism by which an
individual can voluntarily self-exclude from the platform for a definite or
indefinite period;

���� (b)� daily, weekly, or monthly
limits on the amount participants can deposit or open in speculative positions;

���� (c)� features that allow
participants to limit the amount of time spent on the platform, and periodic
notifications that remind participants of how long they have been active and
their net winnings and losses during that session; and

���� (d)� display of the words, �If
you or someone you know has a gambling problem and wants help, call 1-800
GAMBLER,� or some comparable language approved by the division, which language
shall include the words �gambling problem� and �call 1-800 GAMBLER,� in all
print, billboard, sign, online, or broadcast advertisements for an athletic
event market.

���� e.���� In addition to
committing a violation of N.J.S.2C:37-4, any person who allows participants to
open a speculative position on an athletic event market without approval of the
division is guilty of a crime of the fourth degree and, notwithstanding the
provisions of N.J.S.2C:43-3, shall be subject to a fine of not more than
$25,000 and, in the case of a person other than a natural person, to a fine of
not more than $100,000 and any other appropriate disposition authorized by
subsection b. of N.J.S.2C:43-2.

���� 9.��� The operator of an
athletic event market shall maintain and enforce policies to exclude certain
participants from opening a speculative position on an athletic event market,
including:

���� any person who is under the
age of 21 years;

���� any person who is excluded
from gaming activities pursuant to section 71 of P.L.1977, c.11 (C.5:12-71);

���� any person who has
self-excluded from using the platform or from gaming activities pursuant to
section 1 of P.L.2001, c.39 (C.5:12-71.3);

���� any officer, director,
employee, or agent of the operator or its affiliated companies;

���� any officer, director,
employee, or agent of a source settlement provider;

���� any person who has insider
information on a particular market or markets; and

���� any other category of persons
that the division shall, by regulation, designate for exclusion.

���� 10.� The sums received by the
operator of a prediction market platform derived from speculative positions
opened on an athletic event market, less only the total of all sums actually
paid out to participants, shall be subject to the same tax applicable to the
sums received from Internet wagering on sports events pursuant to section 7 of
P.L.2018, c.33 (C.5:12A-16), to be collected by the division and paid to the
State General Fund.

���� 11.� Notwithstanding the
provisions of the �Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1
et seq.), to the contrary, the division may adopt, immediately upon filing with
the Office of Administrative Law, regulations necessary to implement the provisions
of sections 7 through 10 of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill), which regulations shall be effective for a period
not to exceed 180 days from the date of the filing.� The division shall
thereafter amend, adopt, or readopt the regulations in accordance with the
requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).

���� 12.� a.� The Division of
Gaming Enforcement shall establish a public awareness campaign to promote
awareness among the general public of issues relating to athletic event
markets.

���� b.��� The public awareness
campaign shall include, but need not be limited to, the following subjects:

���� (1)�� the legal status of
athletic event markets in New Jersey;

���� (2)�� the differences between
traditional sports wagering and an athletic event market;

���� (3)�� types of prediction
markets that are prohibited in New Jersey;

���� (4)�� the fact that certain
types of prediction markets may be regulated by the federal government, that
restrictions and the ability to participate in certain prediction markets may
vary, and that the fairness and integrity of such prediction markets cannot be
guaranteed by the State;

���� (5)�� the risks of being
defrauded or otherwise losing potentially large amounts of money when opening a
speculative position on an athletic event market;

���� (6)�� the risks of identity
theft when using personal identification or financial information to open a
speculative position on an athletic event market

���� (7)�� special risks for
underage and problem gamblers when opening a speculative position on a
prediction market platform;

���� (8)�� resources and contact
information for participants to report suspicious activity and apparent
violations to State and federal regulators; and

���� (9)�� access to services for
problem gamblers, including contact information for the Council on Compulsive
Gambling.

���� c.���� The director shall
coordinate the efforts of the division with any activities being undertaken by
other State agencies to provide information to the public about prediction
markets.

���� d.��� The director, within the
limits of funds available for this purpose, shall seek to utilize both
electronic and print media, and may prepare and disseminate such written
information as the director deems necessary to accomplish the purposes of this
act.

���� e.���� The division shall make
available electronically on its website, in both English and Spanish,
information about prediction markets as described in subsection b. of this
section.

���� f.���� The director may
accept, for the purposes of the public awareness campaign, any special grant of
funds, services, or property from the federal government or any of its
agencies, or from any foundation, organization or other entity.

���� g.��� The director shall
report to the Governor and to the Legislature, pursuant to section 2 of
P.L.1991, c.164 (C.52:14-19.1), no later than 18 months after the effective
date of this act, on the activities and accomplishments of the public awareness
campaign.

���� 13.� This act shall take
effect 30 days following the date of enactment, except that the Attorney
General and the Division of Gaming Enforcement shall be authorized to take such
anticipatory administrative action as may be necessary for the implementation
of this act.

STATEMENT

���� This bill prohibits the
operation of certain prediction markets in this State and authorizes the
operation of athletic event markets operating in compliance with sports
wagering regulations.� Prediction markets offer participants the ability to
purchase �events contracts� which pay out if the participant has predicted the
correct outcome of the event.� In effect, prediction markets enable people to
wager on everything from sports to elections to world events, all while
avoiding State regulations because they are packaged and sold as federally
regulated securities.

���� The bill, in recognition of
the overarching federal framework, creates three distinct areas of State
regulation: 1) that which is governed explicitly by the Commodity Exchange Act
and federal law, which the State will not interfere with; 2) that which is
contrary to longstanding public policy and should be prohibited outright; and
3) that which has traditionally been regulated by the State and may be allowed
in conformity with applicable State regulations.� As the case law related to
the Commodity Exchange Act evolves, the limitations applicable to State
regulation may change; however, this bill directly acknowledges the federal
framework, establishes basic standards for the operation of prediction markets that
the State can and should implement to protect its citizens, and empowers State
regulators with the tools and authority necessary to respond if and when the
applicable federal limitations change.

���� The bill requires all
prediction markets to meet basic standards, including that the prediction
markets disclose the source of information used to settle a market and take
practical steps to limit potential manipulation, insider trading, or fraud in
violation of State law.�

���� This bill also prohibits
prediction markets that allow participants to effectively wager on death
markets, catastrophic event markets, and political markets.

���� The bill authorizes the State
Attorney General to petition the court for an injunction to stop any operation
of a prediction market that violates these basic requirements.� Operators who
refuse to comply with an injunction issued pursuant to this bill will be fined
$1 million per day that the operation continues.

���� The bill also regulates
athletic event markets in the same manner as sports wagering.� This includes
requiring any operator of an athletic event market to either obtain a sports
wagering license, or become licensed as a casino service industry enterprise
and partner with a sports wagering licensee.� Athletic event markets will also
require a minimum age of 21 years to participate, establish self-exclusion and
responsible gaming programs, and pay taxes at an equivalent rate to online
sports pools.� The Division of Gaming Enforcement will be tasked with the
oversight of athletic event markets.� Any person who operates an athletic event
market without approval of the division will be guilty of a crime of the fourth
degree will be subject to a fine of not more than $25,000 and, in the case of a
person other than a natural person, to a fine of not more than $100,000.

���� The bill requires the Division
of Gaming Enforcement to establishe a public awareness campaign to inform
citizens of this State about the various types of prediction markets which may
be operating in the State, the risks of opening a speculative position on a
prediction market, contact information for reporting suspicious activity to
regulators, and resources for problem gamblers.

���� As defined in the bill:

���� �Prediction market� means a
system that allows participants to open a speculative position on the outcome
of future events, in a bid-ask format.

���� �Athletic event market� means
a prediction market that enables a participant to open a speculative position
on the outcome of a sports event or horse racing.

���� �Catastrophic event market�
means a prediction market that enables a participant to open a speculative
position on an outcome that relates to war, state or national emergencies,
natural or human-made disasters, mass shootings, acts of terrorism, or public
health crises or the ancillary effects thereof.

���� �Death market� means a
prediction market that enables a participant to open a speculative position on
the death, assassination, or attempted killing of a person or group of persons,
or on mass casualty events.�

���� �Political market� means a
prediction market that enables a participant to open a speculative position
that relates to an election for federal office in which voters in New Jersey
will participate, an election for any State office in New Jersey, including
elections for Governor and members of the State Legislature, or an election for
a county or municipal office, or school board or fire district, within the
State.� �