The measure of success for New Jersey sports betting often comes by analyzing NJ sports betting revenue. For the state, however, the standard of success comes from the taxes it collects on the activity.
Legal sports betting launched on June 14 in the Garden State. Since then, sportsbooks have paid $4.15 million in taxes. The majority of that tax money, $3.85 million, came after the start of the 2019 fiscal year, which began on July 1.
William Skaggs, the spokesman for the NJ Department of the Treasury, spoke about the sports betting tax projections to the Press of Atlantic City:
“The first few months of collections are encouraging, and major sporting events such as the NFL playoffs, the Super Bowl and March Madness are still pending. With three-quarters of the fiscal year remaining, the year-end target of $25 million for (fiscal year) 2019 is achievable.”
So, according to the state, New Jersey’s tax revenue from sports betting is right on target.
More about NJ sports betting taxes
New Jersey is the first post-PASPA, high-profile state to implement sports betting. As such, states across the country are watching closely.
There are two different tax rates on sports betting. Sports bets placed at an Atlantic City casino or one of the states two racetracks carry an 8.5 percent tax. A 13 percent tax occurs on any sports bet placed online and in a mobile sports betting app.
For the most part, the tax structure is reasonable. Compare that to Pennsylvania which will tax sports betting at 36 percent when it launches later this year. On the other end of the spectrum, however, is Nevada which imposes a sports betting tax of 6.25 percent.
The state assigns the taxes it collects from sports betting to the state’s General Fund and the Casino Revenue Fund.
The Casino Revenue Fund funds social programs in the state to benefit seniors and the disabled. For eligible residents, it includes:
- Property tax reductions
- Rent assistance
- Utility relief
- Health services
- Transportation assistance
Tony Marino, a sports betting industry analyst, commented on New Jersey’s tax structure:
“The state is a big winner because both internet gaming and sports wagering revenues are taxed at higher rates than land-based win, plus both are increasing at a much higher ratio to land-based revenues. As more sports bets are placed over the internet at higher tax rates in coming months, state gaming tax revenues on a year-over-year basis can be expected to increase even more.”
An additional sports betting tax rate starts in December
Gov. Phil Murphy signed a bill assigning an additional 1.25 percent tax on Atlantic City casinos and NJ online sports betting. The additional tax begins in December. The revenue from that tax will go to the Casino Reinvestment Development Authority (CRDA).
The CRDA uses the tax revenue from AC casinos, and soon sports betting, to support redevelopment projects in the city. The sports betting tax money will specifically help with the “marketing and promotion” of Atlantic City.
The additional funding comes after a report criticizing the CRDA’s management of AC. With new oversight and a new strategic plan, the CRDA is ready to get laser-focused on its mission to help AC prosper.
Larry Sieg, CRDA director of communications and marketing, spoke about the new funding last month:
“After a three-year hiatus, we are looking forward to filling the void with a much-needed promotion of Atlantic City as a world-class vacation destination. Our team looks forward to having the opportunity to once again get the DO AC brand into the consumer market to increase visitation and economic impact.”
Of course, the ultimate goal for the CRDA is to return the management of AC to local officials. Not everyone, however, sees the state management of AC as a bad thing.
Moody’s recently released a credit-positive announcement touting the continued management. That announcement, along with AC’s revitalization efforts, played a part in a credit rating jump of four spots.
AC is not out of the woods yet. Moody’s still vies the city as a credit risk. Additionally, it still has several milestones to meet to gain back control.
The additional sports betting tax to fund the CRDA is an essential component to ensure the city meets those obligations.