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New Jersey lawmakers and Gov. Phil Murphy have agreed to raise the tax on operators of online casinos and sports betting in the state.
Murphy signed the budget prior to the July 1 deadline that will raise the tax rate on both to 19.75%. Currently, online casinos are taxed at 15%, while sports betting is taxed at 13%.
The hikes begin July 1 despite strong opposition from sportsbooks and gaming advocate groups.
Murphy proposed a higher rate
In February, Murphy proposed a tax hike to 25% on both New Jersey online casinos and NJ sports betting in his Summary of Budget Recommendations for FY2026.
The governor’s proposed tax hike was projected to raise an additional $402.4 million a year for the state. The lower agreed rate of 19.75% will undoubtingly bring in less.
According to NJ Advanced Media, the budget also raises the tax on luxury homes and cigarettes.
Lawmakers supported hike
There has been support in the New Jersey Legislature to hike the tax rate on iGaming and sports betting this session.
State Sen. John McKeon (D-Essex/Passaic) introduced a bill in March to increase the tax rate to 30%.
Despite the bill not passing, McKeon told PlayUSA that he thought a hike was imminent.
“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.”
Operators against tax hike
New Jersey gambling operators asked customers earlier this year to take action against a proposed tax hike on gaming. Customers received an email from BetMGM warning of the consequences if tax rates were increased.
“A tax hike will have a MAJOR impact on your favorite online games, putting promotional offers and the best odds at risk.”
In emails sent out by both BetMGM and FanDuel, customers were asked to click a “Take Action” button, which sent a message opposing the hikes to New Jersey lawmakers in Trenton.
Gaming advocacy organizations such as the Sports Betting Alliance and iDEA Growth also vocally opposed the hikes.
Their argument was that raising taxes makes the market less competitive, forcing operators to cut back on promotions, worsen odds, and even possibly lessen the amount games offered.
