New Jersey is seriously considering taking its battle with prediction market platforms all the way to the US Supreme Court, even as it explores taxing the very companies it wants to shut down. The Garden State’s Attorney General’s Office has already filed paperwork extending its deadline to petition SCOTUS, with a formal request due by September 4.

A State Caught Between Two Strategies

Look, the situation is genuinely complicated. Back in April, the Third Circuit Court of Appeals ruled against New Jersey’s attempt to ban platforms like Kalshi and Polymarket from operating within state borders. That loss stung. It also clarified the legal stakes: the court sided with prediction market operators, arguing that federal commodities law preempts state regulation of sports betting on these platforms.

Now the state is preparing what’s called a “writ of certiorari” to ask the Supreme Court to weigh in. Jeremy Feigenbaum, New Jersey’s solicitor general, framed this as existential: allowing federal commodities law to override state control could “federalize a multibillion-dollar-a-year sports-wagering industry at the expense of every state law in the country.” That’s serious constitutional territory.

Meanwhile, the New Jersey Legislature just gave first approval to a bill that would slap a 9% tax on prediction market operators. Senate President Nicholas Scutari and Senator Paul Sarlo are backing the move. Legislative analysts reckon it could generate up to $15.3 million annually by 2027.

The Industry Backdrop

Frankly, this isn’t just New Jersey fighting a lonely battle. The traditional gambling industry, represented by the American Gaming Association, has been vocal in opposing prediction markets, arguing they constitute unregulated, untaxed sports betting. Multiple states have attempted similar bans, and Kalshi has been aggressive in defending its turf, suing jurisdictions that try to block it.

There’s also a separate bill introduced by State Senator Shirley Turner that would outright ban unregulated prediction market activity. If passed alongside the tax measure, it would create something genuinely odd: trying to both tax and eliminate the same operators.

The Supreme Court petition would be the high-stakes play. Whether SCOTUS takes the case remains uncertain, but if it does, the outcome could reshape how states regulate prediction markets nationwide.

What the team thinks

Carl Mitchell says:

Baz has zeroed in on the real mess here, but I’d argue New Jersey’s dual approach actually tells us something important about regulatory pragmatism that the article glosses over: states are learning they can’t simply legislate prediction markets out of existence, so they’re hedging their bets by establishing tax frameworks while the courts sort out the legal questions. From a player protection standpoint, this is smarter than all-out prohibition, because regulated taxation creates oversight opportunities and revenue streams that fund consumer safeguards rather than just pushing operators underground. The September 4 deadline is worth watching, but the real story might be whether this sets a template for other states to regulate rather than wage protracted legal wars they’ll probably lose.