NJ Moves To Ban Controversial Prediction Market Bets

By Sarah Shockey (NJ State House News Service)

From betting on elections to controversial wagers on life-and-death events, prediction markets have exploded in popularity. Now, New Jersey lawmakers want to shut some of them down.

Lawmakers have introduced two pieces of legislation aimed at regulating prediction markets, platforms like Kalshi and Polymarket that allow users to buy and sell shares on the outcome of future events.

Prediction markets allow users to bet on things such as elections or economic data, but many are controversial. Recently, Polymarket got criticized over bets on fates of American military pilots shot down by Iran. 

A bill, S3692, would regulate the prediction markets and outright ban certain markets, including ones that are political, or related to death or catastrophic events. An identical bill, A4689, was introduced in the Assembly. 

“New Jersey already has a comprehensive, tightly regulated sports betting system that prioritizes consumer protection, responsible gaming, and transparency,” said bill sponsor Sen. Shirley Turner, a Democrat from Lawrenceville. “Allowing prediction markets to offer similar wagering opportunities without those same guardrails creates an uneven playing field and exposes residents to unnecessary risk.”

Growth of prediction markets has been exponential. Driven by new technologies like AI, total volume reached $63.5 billion last year, up from $15 billion the year before. Monthly active users rose from around 4,000 to over 600,000, according to Forbes.

New Jersey is one of nine states where lawmakers have proposed regulating or banning prediction market betting, according to BillTrack50. Federal legislation has also been proposed.

In Washington, New Jersey Democratic Sen. Andy Kim is co-sponsoring new federal legislation to prevent abuse and fraud in prediction markets.

The federal legislation would ban prediction markets listings related to war, death, and military actions, among other regulations.

“Corruption and exploitation are thriving right now within the gaps and loopholes of prediction markets. This manipulation leaves the select few winning big, at the expense of working Americans,” said Kim. “By instating basic guardrails and safeguards through this legislation, we can better protect consumers and safeguard against real threats to our national security coming out of this unregulated industry.”

Sports betting under Turner’s proposed state bill would continue under New Jersey law, but operators must have a state sports betting license or be partnered with a licensed operator. 

Her measure would also require the state to launch a statewide campaign aimed at educating residents about prediction markets, risks, and how to report violations. 

“This bill is about keeping New Jersey’s gaming system fair, transparent, and safe,” Turner said. “Innovation should not come at the expense of public health, consumer protection, or the integrity of our laws.”

In 2025, the state increased tax on online bets to 19.75%. Overall, all forms of gambling brought in over $884 million in 2025, according to the Division of Gaming Enforcement. 

But prediction markets still go unregulated. On April 6, a U.S. Court of Appeals ruled that New Jersey cannot regulate sports-related wagers on Kalshi, a web-based prediction market platform.

A three judge panel of the 3rd Circuit ruled 2-1 that the U.S. Commodity Futures Trading Commission has exclusive jurisdiction over the sports-related event contracts that Kalshi allows people to trade on its platform.

“This is a big win for the industry ⁠and millions of users,” Kalshi CEO Tarek Mansour said in a post on X.

The Garden State was one of the first to legalize online gambling, doing so in 2013. Online sports betting followed in 2018. Sports betting-related markets are regulated by the state under the Division of Gaming Enforcement. 

Turner’s bill was referred to the Senate State Government, Wagering, Tourism, and Historic Preservation Committee for further review.