Establishes surtax on certain incomes derived from operation of prediction markets.*

S4447 SCS FISCAL ESTIMATE

LEGISLATIVE FISCAL ESTIMATE

SENATE COMMITTEE SUBSTITUTE FOR

SENATE, No. 4447

STATE OF NEW JERSEY

222nd LEGISLATURE

DATED: JULY 2, 2026

SUMMARY

Synopsis:

Establishes surtax on certain incomes derived from operation
of prediction markets.

Type of Impact:

State revenue increase.

Agencies Affected:

Department of the Treasury.

Office of
Legislative Services Estimate

Fiscal Impact

FY 2027

State Revenue Increase

$10.3 million to
$15.3 million

�

The
Office of Legislative Services (OLS) estimates that this bill will increase
State revenue from a new surtax on prediction market operators between $10.3
million and $15.3 million in FY 2027.�

�

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.

BILL DESCRIPTION

����� This bill establishes a surtax of 9 percent on
allocated taxable net income received by prediction market platforms currently
operating in New Jersey, levied in addition to other taxes such as the
Corporation Business Tax.� It also establishes a corresponding 9 percent surtax
on the gross income of partners or shareholders in certain types of
corporations, if such income is derived from the operation of prediction market
platforms, to be levied in addition to the Gross Income Tax.

����� Under the bill, prediction markets are defined as 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.� �Future events� include the outcome or occurrence
of a federal, state, or local election, events in popular culture, an athletic
event or game of skill, any game played with cards, dice, equipment, or any
mechanical or electronic device machine, and legal actions.� The bill does not
distinguish the types of speculative positions, and the surtax would be applied
uniformly on incomes derived from all prediction markets handling speculative
positions on applicable future events as defined by the bill.

FISCAL ANALYSIS

EXECUTIVE BRANCH

����� None received.

OFFICE OF LEGISLATIVE SERVICES

����� The OLS projects that this bill will increase State
revenue from new surtaxes on prediction market operators between $10.3 million and
$15.3 million in FY 2027.

����� The estimate does not include subsequent years for two
reasons: first, prediction markets constitute a new industry whose trajectory
is subject to considerable uncertainty; and second, the influx of users during
the 2026 World Cup represents a one-time market boost that is unlikely to recur
in future years, at least not at a comparable magnitude, thereby rendering
accurate estimation of future revenue generation less reliable.

����� 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 collections 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 State
revenue collections from those licensees.

����� As an overarching caveat, the OLS�s projections depend
on the quality of underlying data and the accuracy of technical assumptions
regarding the total prediction market revenue.� No publicly available
regulatory reports or operator disclosures on this subject were identified.�
Available information appears to be derived primarily from industry commentary
and third-party calculations from transaction volume and fee structure of each
platform.

Section:

State Government

Analyst:

Jae Wan Ahn

Assistant Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

This legislative fiscal estimate has been produced by the
Office of Legislative Services due to the failure of the Executive Branch to
respond to our request for a fiscal note.

This fiscal estimate has been prepared pursuant to P.L.1980,
c.67 (C.52:13B-6 et seq.).