New Jersey and Vermont tighten prediction market regulations amid industry scrutiny

Legislatures in New Jersey and Vermont propose comprehensive restrictions on prediction markets, with New Jersey introducing a regulatory framework akin to sports betting and Vermont expanding its prohibition and introducing new levies, signalling a potential industry shift.

Lawmakers in New Jersey and Vermont have moved to tighten rules governing prediction markets, proposing stringent restrictions on the types of event-based contracts that platforms may host and expanding oversight where those platforms operate within state borders, according to iGamingToday and reporting by Covers. New Jersey's Senate Bill 3692, filed on 24 February, would bar markets tied to political elections, catastrophic events such as wars or natural disasters, and outcomes involving death, while permitting certain athletic-event markets under strict conditions. According to iGamingToday, the measure is sponsored by Senators Shirley K. Turner and John F. McKeon. Covers reports the bill frames its approach to avoid conflict with markets already regulated under the federal Commodity Exchange Act. - Paragraph 1 sources: [2]

The New Jersey proposal would subject eligible athletic-event prediction markets to the same regulatory framework that governs internet sports wagering in the state. Platforms wishing to offer these markets must either hold a sports wagering licence or partner with an entity that does, and would be overseen by the Division of Gaming Enforcement under rules modelled on existing online sports-betting standards, iGamingToday reported. Operators would be obliged to verify participants are 21 or older and to implement responsible-gaming measures including self-exclusion, deposit limits and clear problem-gambling helpline information in advertising. - Paragraph 2 sources: [2]

Enforcement mechanisms in the New Jersey draft are robust: the Attorney General would be empowered to seek court injunctions, and continuing operation after an injunction could trigger civil penalties of $1 million for every day a platform remains active in breach of the law, iGamingToday and Covers noted. The bill also proposes that revenue from permitted athletic-event markets be taxed at the same rate as internet sports wagering and remitted to the State General Fund. - Paragraph 3 sources: [2]

In Vermont, legislators have taken a different but comparably restrictive route. House Bill 913, read for the first time on 25 February and referred to the Committee on Government Operations and Military Affairs, would expand the state's definition of unlawful wagering to include prediction-market contracts tied to sports, contests, political campaigns, disasters, war and death. The measure would also render such agreements void in contract law and allow individuals to reclaim funds lost to these markets, according to iGamingToday. - Paragraph 4 sources: [2]

Vermont's proposal includes a new levy aimed at generating revenue from legal sports betting: a $0.50 fee on every wager placed with licensed operators, a provision reported by iGamingToday that would create an additional income stream while tightening the broader regulatory regime. The bill’s movement through committee will determine whether those changes are adopted. - Paragraph 5 sources: [2]

Industry observers and platform operators are likely to watch both states closely, as New Jersey’s regulatory template could become a model for other jurisdictions seeking to balance innovation in prediction markets with consumer protection and public-policy concerns. Covers highlights that the New Jersey bill emphasises consumer protections, anti-fraud measures and transparency requirements while explicitly preserving federal jurisdiction where applicable. - Paragraph 6 sources: [2]

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Source: Noah Wire Services