New Jersey Bill 3692 Could Reshape Prediction Markets

by Kevin Lentz, 6 March 2026

New Jersey Senate Bill SB 3692 bans political markets and puts sporting contracts firmly under state betting rules.

New Jersey may ban prediction markets, which compete with state sportsbooks.

Key Facts:

• New Jersey Senate Bill 3692 proposes banning prediction markets tied to elections or disasters
• Sports-related contracts would be required to operate under state sportsbook licences
• The bill targets platforms like Kalshi, currently regulated at the federal level
• Lawmakers argue the proposal protects consumers and ensures regulatory consistency

New Jersey lawmakers are eager to show that they are taking the threat to their ability to make laws on sports and political betting seriously; at issue, though, is whether their hands are tied by the Supremacy Clause.

Their latest attempt comes after a stinging rebuke in April 2025 in the Garden State, when a federal court issued a preliminary injunction against the New Jersey Division of Gaming Enforcement (NJDGE) that prevented it from attempting to enforce a cease-and-desist order against prediction markets operating there.

At issue is the Federal Supremacy Clause in Article VI of the Constitution, which states that federal law trumps state law. It’s applicable here because the Commodity Exchange Act granted the Commodity Futures Trading Commission (CFTC) clear federal authority to regulate derivative markets.

This includes swaps or simple binary outcomes, such as whether silver will trade over $90 in April or, in this case, whether the Pittsburgh Pirates will score over three runs in today’s game.

Kalshi and other prediction markets have argued that they offer federally protected derivatives through these types of contracts and that federal law, not state law, applies. So far, most federal judges have agreed, but not all, suggesting that this will eventually end up before the Supreme Court.

New Jersey Takes Another Swing

SB 3692 was brought to the floor by Senator Shirley Turner. It is well-intentioned and intended to bring sports betting markets under the state’s well-regulated, taxed sports betting system.

It would also prohibit any prediction market contracts on certain types of real-world outcomes such as assassinations, deaths, natural disasters or war. It would also strictly rule out any contracts in any political elections.

The reasoning here is simply that morally questionable futures markets based on others’ suffering might undermine public trust in its institutions. Appropriately, then, the bill also calls for much stronger consumer protections around insider trading and other fraud or manipulation.

The Senate believes that this bill is an exercise in asserting the state’s police powers and that the CEA doesn’t explicitly prevent states from protecting their consumers.

It’s carefully worded so as not to interfere with federal laws while attempting to carve out state-level protections. Whether it will survive federal courts is anyone’s guess, however.

What’s left unsaid is that sports books in Atlantic City and online throughout the rest of the state brought in over $1.1 billion in revenue in 2025, of which 19.75% goes to the state. That’s a $200 million hole in the state budget from an industry that claims it can’t be regulated at the state level.

Tough Road Ahead For State’s Rights

And these same prediction markets have found powerful allies in the current presidential administration, with the President’s own son serving on the board of one of the largest prediction market makers Polymarket.

Perhaps the strongest proponent of prediction markets in the administration is Michael Selig, the new Chairman of the CFTC. He has already shifted the department towards an aggressive defense of prediction market rights.

They have already filed amicus briefs in favour of prediction markets in several court cases, as well as opposing proposed rules on sports and election swaps.

With federal courts mostly settling with prediction markets and the CFTC now effectively signaling that they intend to move forward with a new comprehensive federal framework that would likely preempt most state laws, it’s hard to see how state bills like SB 3692 can make a difference without changes in federal law.

Something that, with the current partisan climate in Washington, Kalshi would very likely have long odds against.