New Jersey and Vermont lawmakers have moved to tighten control over prediction markets, introducing measures that would prohibit certain event-based contracts while reinforcing state oversight of sports betting.
The proposals reflect a growing regulatory conundrum as states seek to address financial products that resemble gambling but are often structured under federal commodities law.
That debate is at the centre of several ongoing legal fights involving various states and prediction market operators like Kalshi, Polymarket and others.
In New Jersey, Senate Bill 3692 was introduced on 24 February. The legislation would bar specific categories of prediction markets and establish compliance requirements for platforms operating within the state.
Sponsored by Sens Shirley K. Turner and John F. McKeon, the bill targets markets that allow participants to take speculative positions on the outcome of future events.
The measure recognises the federal Commodity Exchange Act and states that New Jersey will not interfere with markets expressly governed by federal law.
However, it requires platforms active in the state to comply with state standards where no direct conflict exists.
The bill would prohibit markets connected to political elections, catastrophic events such as war or natural disasters, and death-related outcomes involving assassination or mass casualty events.
Steep penalties for violators
The Attorney General would be authorised to seek court injunctions against violators. Operators that continue activity after an injunction is issued would face civil penalties of $1m per day.
At the same time, the proposal permits athletic event markets if operators hold a sports wagering licence or partner with a licensed entity under existing law.
Oversight would be assigned to the Division of Gaming Enforcement, which would implement regulations largely aligned with those governing online sports betting.
Operators would be required to verify that participants are at least 21 years old, adopt responsible gaming safeguards including self-exclusion tools and deposit limits, and include problem gambling helpline messaging in advertising.
Revenue derived from athletic event markets would be taxed at the same rate as internet sports wagering and allocated to the State General Fund.
The bill also directs the Division of Gaming Enforcement to develop a public awareness campaign explaining the legal status of prediction markets.
It would also outline associated risks and provide information on reporting suspicious conduct and accessing gambling support services.
Vermont only testing the waters
In Vermont, House Bill 913 was introduced and read for the first time on 25 February. It was then referred to the Committee on Government Operations and Military Affairs the same day.
The short-form proposal would amend Vermont’s criminal statutes to clarify that unlawful wagering includes offering prediction market securities or commodities tied to outcomes involving sports, contests, individuals, political campaigns, disasters, war, all-hazards events, or death.
It would also amend state contract law to render such agreements void and allow civil recovery of lost funds.
In addition, the Vermont bill proposes a $0.50 fee on each wager placed through the state’s licensed sports wagering operators.