New Jersey online casinos generate the majority of gambling-related taxes collected by the state, according to public reports. For the last three years, internet casino revenue has produced more taxes than all nine Atlantic City casinos.
The post-pandemic growth of online casinos in NJ and the state’s higher tax rates on all forms of internet wagering have altered the balance. And, based on all currently available data, that change is likely permanent.
Casino Revenue Fund sees record-setting contribution
In 2022, NJ online casinos contributed more than $249.4 million in taxes to the state’s Casino Revenue Fund. Atlantic City casinos paid over $179.1 million in taxes on land-based gambling revenue last year, according to the state’s Division of Gaming Enforcement.
Online sports betting in NJ produced $93.9 million in taxes last year, while retail sportsbooks paid less than $4 million in taxes. Those figures include sportsbooks attributed to Atlantic City casinos and the state’s licensed racetracks.
For budgeting purposes, state agencies do their bookkeeping using a fiscal year that runs from July 1 through June 30.
The most recent fiscal year – July 1, 2022, to June 30, 2023 – saw the Casino Revenue Fund receive a record-setting $504 million, according to the DGE. Online casinos generated more than $266.7 million (53.9%) of the $494 million in gambling taxes reportedly paid to the CRF in fiscal year 2023.
Online gambling in NJ still finding ways to grow
The percentage of statewide gaming-related taxes produced by online gambling has increased every year since online casinos in NJ first launched in 2013.
Beginning in calendar year 2020 and fiscal year 2021 (July 2020 through June 2021), taxes from internet gambling revenue has accounted for a larger percentage of the statewide total than Atlantic City’s casinos.
When Gov. Phil Murphy ordered AC casinos to close in March 2020 because of the COVID-19 pandemic, NJ gamblers shifted their playing habits online. The trend continued even after Murphy lifted the shutdown order in July 2020.
In FY2020, online casino revenue taxes generated $103.3 million, roughly 40.5% of all gambling-related taxes sent to the CRF. The following fiscal year (July 2020 through June 2021), the taxes generated by NJ online casinos jumped to $177.4 million, or 49.5% of the CRF total.
The results are comparable with calendar year returns. In 2020, online casinos generated $145.7 million (48%) while AC casinos, impacted by the COVID closures, paid $107 million (35%) in taxes to the CRF. Internet gambling taxes ($205 million, 42.3%) accounted for a higher total than land-based gambling taxes ($178 million, 36.6%) in 2021.
Last year, the splits – 47.4% from online casinos, 34% from AC casinos – reflected the largest-ever non-COVID difference.
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Bigger and better than ever, NJ online casinos only get 5-year extension
Online gambling in NJ (excluding sports) now accounts for roughly 35-40% of the total annual gaming revenue reported by Atlantic City casino licensees and approved online entities. That is the highest percentage in the soon-to-be-10-year history of legal internet gambling.
The Garden State saw nearly $155.3 million in NJ online casino revenue in August, the most recent monthly data available. It was an 18.1% year-over-year increase from August 2022.
Year-to-date, online casinos have netted more than $1.24 billion in revenue, which is 14.6% higher than through the first eight months of 2022.
Ten years in and the NJ online casino industry continues to grow and thrive. Which adds yet another wrinkle into the decision-making of state lawmakers over the summer to only grant the vertical a five-year extension as opposed to another decade.
