New Jersey is adding its name to the long list of states taking action against prediction markets after senators Nicholas Scutari and Paul Sarlo introduced a bill to regulate prediction markets at the state level.
Senate Bill 4447, which was presented on June 11th, ignores the recent ferocious push back from the Commodity Futures Trading Commission (CFTC) on similar cases. The agency has been suing states for similar actions.
Prediction markets avoid reporting and compliance requirements provided by state law, says bill
Taking aim at the sector, the bill criticizes the industry for avoiding the same responsibilities that sportsbooks must adhere to under current guidelines.
The text states: “Because these prediction markets are registered and operate under the Commodity Exchange Act, they assert that they need not comply with state law,
“As a result, prediction markets are able to offer wagers without the approval of the appropriate gaming authorities, and offer wagers to persons under the age to legally wager in this state, pay lower tax rates than the operators who offer the exact same wagers but who have received proper licensure to do so, and avoid the reporting and compliance requirements provided by state law.”
The bill follows a U.S. Court of Appeals for the Third Circuit ruling that Kalshi’s sports event contracts fall under the jurisdiction of the CFTC and the Commodity Exchange Act (CEA). The dispute began after New Jersey regulators issued cease-and-desist orders to Kalshi and Robinhood in March 2025.
Kalshi challenged the order in court and won a temporary injunction, prompting an appeal by the state. In a 2-1 decision, the appellate court ruled that New Jersey lacked authority to block the contracts, finding that the CEA grants the CFTC exclusive oversight of products traded on designated contract markets.
The ruling marked the first time a federal appeals court has held that sports event contracts are subject to federal, rather than state, regulation.
Prediction markets to be overseen by New Jersey regulator
Under the new bill, the New Jersey Division of Gaming Enforcement (DGE) would be the sole regulator of prediction markets and establish rules governing their operation in the state.
The measure prohibits contracts tied to catastrophic events, deaths and political outcomes, arguing such markets conflict with state policies designed to protect public health, safety and welfare.
Lawmakers also cited concerns over public officials using nonpublic information to profit from political prediction markets. Under SB 4447, state employees, elected officials and their immediate family members would be barred from trading political contracts. Violations could result in fines of up to $10,000, imprisonment of up to 18 months, or both.
The move comes just days after a Wisconsin congressman suggested new laws to hold lawmakers to account when it comes to placing trades via any prediction market platform.
Rep. Bryan Steil has proposed penalties for lawmakers who profit from prediction market bets using insider information, requiring them to forfeit winnings and pay a fine of at least $2,000 or 10% of the transaction value. The measure, which would be added to a congressional stock trading bill, targets political and government-related contracts while still allowing wagers on events such as sports. The proposal follows a Senate rule change earlier this year banning senators and staff from trading on prediction markets.
World Cup drives increase in year-on-year prediction market users
Meanwhile, new research into the impact of the World Cup on the prediction market sector shows a steep upward trajectory of those using the platforms to place their trades.
Data shows Kalshi and Polymarket recorded some of the industry’s largest increases in daily users over the past month. According to Apptopia, the two platforms accounted for nearly 75% of all downloads among major betting and prediction market apps between June 1 and June 15.
Kalshi led the period with a 42.3% share of downloads, followed by Polymarket at 31.2%. Traditional sportsbooks trailed behind, with DraftKings capturing 13.7%, FanDuel 8.9% and BetMGM and Caesars combining for 3.9%.
The surge suggests growing consumer interest in event-based contracts tied to World Cup outcomes and in-game occurrences, allowing users to trade on everything from match results to specific moments during broadcasts.
The increase in engagement has not been mirrored by sportsbook stocks, however. Shares of DraftKings and Flutter Entertainment, FanDuel’s parent company, have remained under pressure this year despite the influx of users during the tournament.
