New Jersey Weighs SCOTUS Appeal on Prediction Markets While Eyeing a 9% Tax
New Jersey is weighing whether to ask the US Supreme Court to settle the legality of prediction market platforms operating sports event contracts inside its borders. The state’s Attorney General’s Office filed paperwork on June 26 to extend the deadline for a writ of certiorari after a federal appeals court blocked efforts to shut down Kalshi and similar operators. At the same time lawmakers are advancing a bill that would tax those same platforms at 9 percent.
This dual-track approach captures the tension operators face in a growing segment that sits between federal commodities rules and state gambling authority. After eighteen years across iGaming and sportsbook operations the pattern is familiar. States want the revenue but fear losing control of the activity.
Writ of Certiorari Deadline Extension
The New Jersey Attorney General’s Office moved on June 26 to push the filing deadline for a formal petition to the US Supreme Court. The state wants more time to decide on seeking review of the Third Circuit’s April ruling that blocked its attempt to prohibit Kalshi, Polymarket and comparable platforms from offering sports event contracts.
Jeremy Feigenbaum, New Jersey’s solicitor general, described the matter as tremendously important. He warned that the appeals court’s conclusion would federalize a multibillion-dollar-a-year sports-wagering industry at the expense of every state law in the country.
Feigenbaum signaled the state aims to file the official petition by September 4. The move keeps the door open for Supreme Court intervention even as New Jersey explores other levers.
From the supplier side this kind of regulatory ambiguity stalls commercial deals and forces operators to price in legal risk. The Third Circuit decision left platforms with a temporary shield but no final clarity.
The 9% Tax Bill Gaining Traction
A bill that would impose a 9 percent tax on prediction market operators cleared its first legislative hurdle last weekend. Backed by Senate President Nicholas Scutari and Senator Paul Sarlo, D-Bergen, the measure would layer the new rate on top of the state’s existing corporation business tax and gross income tax.
The Office of Legislative Services projects the tax could generate up to $15.3 million in additional revenue for the state in 2027. That figure arrives while the federal government continues to permit these platforms to accept bets on sporting events.
The traditional gambling industry has pushed back hard. The American Gaming Association used its February presentation on nationwide casino revenue to reiterate opposition to prediction markets, arguing they amount to untaxed sports betting.
State Senator Shirley Turner introduced a separate bill in February that remains unpassed. It seeks to ban unregulated prediction company activity and require operators offering sports contracts to follow current New Jersey gambling laws.
Kalshi’s Legal Victory and Industry Reaction
Kalshi secured a key win in April when the 3rd Circuit Court of Appeals prevented New Jersey from shutting down its sports prediction markets. The company had sued after the state joined others attempting to enforce a ban.
Tarek Mansour, Kalshi’s chief executive officer, called the ruling a big win for the industry and millions of users. The decision turned on the court’s view that sports event contracts fall under the exclusive jurisdiction of the Commodity Exchange Act and that the Act preempts state regulation.
New Jersey is not alone. A growing list of states has moved against these platforms yet the federal stance has created openings that operators are exploiting.
The revenue potential is real. Yet so is the risk that a Supreme Court ruling could lock in federal preemption and strip states of their traditional authority over wagering.
Risks and Counterarguments in the Dual Approach
Pursuing both taxation and prohibition at once carries clear contradictions. Taxing an activity you are simultaneously trying to eradicate sends mixed signals to operators, users and the courts.
If the Supreme Court accepts the case and sides with the platforms the multibillion-dollar industry could expand under federal rules that states cannot easily override. That outcome would validate the Third Circuit’s logic and limit New Jersey’s leverage.
On the other hand a narrow ruling that preserves state authority could embolden bans and reduce the addressable market for prediction platforms. Operators would then face higher compliance costs or outright exclusion in key jurisdictions.
From my experience across European regulated markets operators price in this kind of uncertainty quickly. The real cost appears in delayed partnerships and conservative liquidity provision until the legal picture stabilizes.
The American Gaming Association’s stance highlights another risk. Established sportsbooks and casinos see prediction markets as direct competition that operates with lighter oversight. Any tax revenue gained may come at the expense of licensed operators already paying higher effective rates.
The Bottom Line
New Jersey’s simultaneous push for a SCOTUS review and a 9 percent tax illustrates the awkward position many states occupy. They recognize the revenue opportunity yet worry about ceding control of sports wagering to federal commodities law. The September 4 petition deadline and the tax bill’s progress will force clearer choices in the coming months.
For gaming executives and sportsbook operators the signal is to track the Supreme Court’s response closely. A decision that federalizes this activity could reshape product roadmaps and partnership strategies nationwide. The data from early 2027 tax collections, if the bill passes, will offer the first hard numbers on whether the dual approach delivers revenue without unintended market distortion.
