NJ Sports Betting Tax Gets A Redirect To Fund CRDA In New Law

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It’s less than four months into the life of New Jersey sports betting and already taxes are scheduled to increase.

The man whose signature allowed NJ sports betting to get off the ground, Gov. Phil Murphy has now signed legislation to up taxation on revenue from sports wagering.

The Casino Reinvestment Development Authority, per the Press of Atlantic City, stands as the beneficiary after losing its primary source of funding just a few years ago.

“After a three-year hiatus, we are looking forward to filling the void with much-needed promotion of Atlantic City as a world-class vacation destination,” said Larry Sieg, CRDA director of communications and marketing. “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.”

New NJ sports betting taxes at a glance

The latest piece of legislation signed by Murphy includes a 1.25 percent tax on sports betting revenue in the Garden State. That falls on top of the already-established 8.5 percent tax at land-based sportsbooks and the 13 percent tax on mobile and online wagering.

Taking effect in December, this new tax, at least for Atlantic City casinos, will go toward the “marketing and promotion” of the city. Taxed revenue from the state’s two racetrack sportsbooks will be distributed to their respective municipalities.

For perspective, consider how the still-expanding industry fared during the most-recently reported month.

In August, retail NJ sports betting revenue totaled $6,059,662 while mobile products generated $3,123,281. Between the two markets, taxes toward the state’s general fund totaled more than $900,000.

Certainly, even a sliver of the burgeoning handle would pay dividends, especially with football season now in full swing. Figures from September are expected to be released Friday. The handle should far exceed the more than $95 million seen in August.

Of course, not all parties involved are content with the increased tax.

Mayor points to history

As his city enjoys a renaissance, Atlantic City Mayor Frank Gilliam remains staunchly opposed to Murphy’s newest legislation.

A member of the CRDA Board of Directors, Gilliam expressed displeasure with the association cutting into sports betting revenue.

“As mayor, I’m never going to be happy with revenue generated in Atlantic City going to a state agency when it could have been used to help the city. History has shown that marketing money has not been spent wisely.”

Gilliam apparently had a point.

Poor track record for CRDA

In its 34-year-history, the CRDA never underwent a state performance audit.

Yet the results of one released last month pointed out a number of areas in which “fiscal mismanagement and waste” and “operational deficiencies” existed. The audit covered only 17 months, though examples of poor management became clear.

Among the examples: the lack of proper return on investment protocols in deals with the Miss America Organization and LiveNation summer beach concerts.

As recently as Sept. 20, New Jersey’s transition report chastised the CRDA’s spending habits. In particular, the association shelled out $14 million on Steel Pier’s Observation Wheel.

Until 2016, the CRDA relied on the casino investment alternative tax (IAT) as its primary source of revenue. Two years ago, however, the state legislature used those funds to help pay down Atlantic City’s heavy debt. As a result, the CRDA turned to luxury taxes and room and parking fees.

The loss of access to IAT, according to the association, cost the CRDA some $22 million. Now, it appears, the organization will have another spring to tap: NJ sports betting.

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Grant Lucas

About

Grant Lucas is a longtime sportswriter who has covered high school, collegiate, and professional levels. A graduate of Linfield College in McMinnville, Grant now focuses his attention on the growing NJ online gambling and sports betting scene.