US states act on prediction market taxes and micro-betting

Illinois approved a tax on contracts for sports-event prediction markets as part of its FY2027 budget. The measure imposes a 1.75% tax on exchange wagers, rising to 3.5% after the first 5 million contracts each year. The budget provision also creates licensing and taxation requirements for daily fantasy sports operators. The legislation was adopted amid ongoing litigation: the Commodity Futures Trading Commission sued Illinois in April, and a major cryptocurrency exchange previously challenged state limits on prediction market activity.

Colorado Governor Jared Polis signed two bills, SB 131 and SB 163, that expand consumer protections and regulatory authority. SB 131 adds deposit limits and bans gambling-related push notifications and text messages from licensed operators. SB 163 increases enforcement and compliance powers for state regulators. Colorado is the first state to bar wagering push notifications from licensed operators.

New Jersey’s Assembly Tourism, Gaming and the Arts Committee advanced A3258, which would ban online micro-betting. Micro-bets allow wagers on very short in-game events, such as the next play or pitch. A companion Senate bill that advanced earlier would prohibit micro-betting both online and at retail sportsbooks. Supporters of the restriction say the high frequency of micro-bets can encourage impulsive gambling and raise problem-gambling risks.

In New York, the Assembly passed the No Gambling Ads for Kids Act to bar gambling advertisements to users under 18, covering sports betting, prediction markets, sweepstakes-style games and loot boxes. The State Senate approved S 7908, which would require the New York State Gaming Commission to maintain an exclusion list allowing individuals or guardians to block use of identifying information to create mobile wagering accounts. S 7908 would also tighten age verification and prohibit reliance solely on self-reported ages. Both measures move to the opposite chamber for consideration.

The Rhode Island Senate passed S 3118 to expand the state’s sports-wagering market beyond its single-operator model. The bill would require the Division of Lottery to issue an open request for vendor contracts by Jan. 1, 2027, and to award additional contracts until the state has between four and six sportsbooks. The bill would also allow licensees broader authority over marketing and promotions, subject to an approved plan and division rules.

Pennsylvania legislators introduced HB 2557 to set regulatory standards for skill-game machines. The proposal would require centralized monitoring, player identification checks, self-exclusion programs, age verification, loss limits and location restrictions. The bill focuses on consumer protections and oversight and does not set tax rates. Litigation over the machines remains pending, with the Pennsylvania Supreme Court expected to address related disputes.

At the federal level, Representatives Dan Goldman and Blake Moore introduced the Gambling Disorder Health Study Act, directing federal agencies to study the economic and public health impacts of gambling, including advertising and addiction. The bill would fund the study with 10% of federal excise tax revenue from state-authorized wagers for up to three fiscal years.

Several measures are now in legislative review or facing legal challenges as lawmakers, regulators and courts consider final rules and enforcement.