New Jersey Gov. Phil Murphy has proposed raising taxes on sports betting and online casinos as part of his budget recommendations for the year.
The document, Summary of Budget Recommendations for FY2026 suggests a 25% rate for both gambling verticals starting in July, nearly double the current rate. Currently, online casino and sports betting operators are taxed at 15% and 13%, respectively.
Murphy’s budget recommendations provides projections on additional revenue the Garden State would generate from the tax hike:
“This proposal is expected to generate an additional $322.6 million for the Casino Revenue Fund. As a result, FY2026 revenues are projected to grow to $989.9 million, up 54.2 percent.
“The proposal will also impact Sports Wagering revenue deposited into the State’s General Fund and is expected to raise an additional $80 million in FY2026.
“In total, the proposed tax rate change will increase internet gaming and sports wagering revenues deposited into both the State’s General Fund and Casino Revenue Fund by $402.4 million.”
New Jersey had been eyeing a tax hike for awhile
State Sen. John McKeon, D-Essex/Passaic, introduced a bill to increase the tax rates last March. His proposal would have raised rates to 30%.
The bill did not pass in time for 2024. However, McKeon predicted rates would rise sooner or later. He told PlayUSA in June, before the 2025 budget went into affect:
“I’m disappointed that we didn’t get it done in time to be helpful this budget cycle. But there’s no doubt with the forecast for economic times in front of us that, ultimately, we will make some changes to the online gaming tax rate in our state.”
Those changes appear to be on its way, though, Gov. Murphy’s proposal is not as high as McKeon’s.
Instant reactions to potential tax increase
Caesars Entertainment held its Q4 2024 earnings call on Tuesday, hours after Gov. Murphy published his budget proposal. The company offers multiple online casino platforms, including Caesars Palace and Horseshoe.
Caesars CEO, Tom Reeg, does not appear all that concerned about the potential hike in taxes. He said on Tuesday:
“I think it’s a headline cycle we’re in. It’s a function of where state budgets are versus where they’ve been in the last couple of years.”
He also told investors that he’s not worried about the company falling short of financial goals”
“We are well on the path to our targets. Can something move the date a month or two sure, but there’s no there’s no doubt in the room that we are getting to where we’ve been telling you for four years.”
While Caesars had more of a neutral take on the news, iDEA Growth, a non-profit seeking to grow jobs and expand online interactive entertainment, had a much stronger response. iDEA Growth called New Jersey’s legal online gambling market a “national success story” and is baffled by the Gov. Murphy’s proposal.
Jeff Ifrah, iDEA Co-Founder and General Counsel, commented on New Jersey’s tax proposal:
“Competition is growing from unregulated alternatives, including CFTC-approved sports contracts that take bets from 18-year-olds, operate outside state laws, and pay no state taxes.
“Raising taxes only makes New Jersey’s market less competitive, driving players toward platforms that aren’t regulated and that the state can’t benefit from.”
He urged lawmakers to strengthen a “proven model.” However, momentum has been building to raise the tax rates. It gained more with Gov. Murphy’s proposal.
