New Jersey looks set to raise its taxes on online casinos and sports betting with lawmakers reportedly agreeing to a new rate of just under 20% in the state’s proposed budget.
Governor Phil Murphy had originally put forward a 25% rate, but Sports Betting Dime reports that discussions have led to a rate of 19.75% being agreed upon. The new rate is believed to apply to both iGaming and sports betting. The new state budget must be submitted by June 30.
The state currently taxes iGaming operators at 15% and sportsbooks at 13%. Last year, the state collected around $500 million in taxes, with New Jersey online casinos generating a record $2.39 billion and sportsbooks generating just over $1 billion.
It is estimated that a new rate of around 20% on both online casinos and sports betting will generate over $300 million in additional funds for the state.
Reduced Increase Favored By Atlantic City And Sportsbooks
The original proposal by Gov. Murphy to increase taxes to 25% was met with opposition from casino owners in Atlantic City.
Mark Giannantonio, President of the Casino Association of New Jersey, commented on the proposal to increase the tax to 25%, ““A tax hike in this difficult economy would threaten these benefits and negatively impact the operations, workforce and marketing of our casino hotel properties. Reductions in these benefits will also lead to reductions in consumer spending in the casino properties and other Atlantic City businesses.”
Giannantonio also believes the tax increase will lead to more bettors turning to unregulated platforms, he states, “Further, as evidenced in other jurisdictions, this type of tax hike will not yield such expected tax dollars to the State Treasury because it will result in diminishing returns through a consumer shift away from the licensed and regulated providers and back to the unregulated and illegal, offshore online businesses from which the state derives no revenue.”
Additionally, New Jersey sportsbooks opposed plans to increase taxes. Jeremy Kudon, president of the Sports Betting Alliance (SBA), commented, “This tax increase would be a wrong turn for New Jersey. Since New Jersey first launched regulated sports betting seven years ago, sports betting operators have created thousands of jobs and generated hundreds of millions in revenue for New Jersey.
“Raising sports betting taxes will make sports betting more expensive for customers, slow operator investments in jobs and local business partnerships and put the regulated industry at a disadvantage to unregulated and offshore operators who pay no state taxes.”
New Jersey Targeting Unregulated Markets
It is estimated that offshore sportsbooks generated almost $1 billion in revenue in New Jersey last year. Additionally, unregulated casinos reportedly generated $1.5 billion in revenue. New Jersey has been making several moves to reduce the size of the unregulated market.
A bill proposing a ban on sweepstakes casinos was voted unanimously in favor in an Assembly committee last week and will now go to a full vote. A companion bill in the Senate is under consideration in the Senate Budget & Appropriations Committee. If passed there, it will progress to a full vote, and if approved in both chambers, it will be up to Gov. Murphy to sign off on the legislation.
Additionally, the state is currently in a legal battle against sports prediction markets site Kalshi. The decision in the New Jersey case could be instrumental for the future of the markets, which are not regulated at the state level. Over 60 tribes, as well as 34 states, filed briefs supporting the New Jersey Division of Gaming Enforcement’s (NJDGE) case against Kalshi.
The actions of the NJDGE will hope to offset any fears of users turning to unregulated markets after a tax increase.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
