There were a lot of good metrics around the sudden growth of the online sports betting industry in New Jersey – particularly Jersey City – shortly after sports wagering was suddenly allowed in a surprise decision by the U.S. Supreme Court in 2018.
Betting companies already had a presence in the state because of Atlantic City. And the state provided a friendly regulatory structure, complete with a low tax rate.
That may be changing.
The budget Gov. Phil Murphy presented on Tuesday essentially will double the tax rate on online sports wagering companies, from 13% to 25%. Murphy did not mention the increase during his speech, but administration officials acknowledged it’s in the budget – and projected the increase in tax will generate an additional $80 million in revenue.
While a 25% tax seems like a lot, it still is way below that of New York City, which takes a whopping 51% of gambler operator revenues.
Sports gambling officials in New Jersey were not surprised by Murphy’s comments. Discussions of an increase have been ongoing.
There is hope that the final number will be lower, perhaps closer to 20%. And there is concern about the impact if it’s not.
Jeremy Kudon, president of the Sports Betting Alliance, said the tax increase would be a wrong turn for New Jersey.
“Since New Jersey first launched regulated online sports betting seven years ago, sports betting operators have created thousands of jobs and generated hundreds of millions revenue for New Jersey,” he said. “National operators like BetMGM even chose New Jersey as its home base, investing heavily in a headquarters and jobs here. Any effort to increase sports betting taxes on New Jerseyans threatens all of that progress.”
Kudon questions why the state would want to slow the momentum.
“Raising sports betting taxes will make sports betting more expensive for customers, slow operator investments in jobs and local business partnerships, and put the regulated industry at a disadvantage to unregulated and offshore operators who pay no state gaming taxes,” he said.
Mark Giannantonio, president of the Casino Association of New Jersey, said his group strongly opposes any increase, saying it will threaten the stability of Atlantic City’s gaming and tourism industry, as well as the industry’s workforce,.
“This proposal is ill-advised and, if passed, will have significant adverse consequences for brick-and-mortar casinos,” he said.
Giannantonio said the impact will be far-reaching.
“The partnerships between online gaming companies and Atlantic City casinos have established significant cross-marketing and promotions, such as complimentary rooms, entertainment, and promotional gaming credits for use at the properties to help bring more visitors to Atlantic City,” he said. “More importantly, the financial benefits of these partnerships provide additional resources that are reinvested in our brick-and-mortar Atlantic City properties, support our operations, and augment our ability to compete in the regional marketplace more effectively.”
And while a tax anywhere from 20%-25% would be far lower than New York City, operators based in New Jersey – now the national hub for sports betting operators in the country – are concerned about what the impact of a New Jersey increase could have nationally.
“A tax hike in this difficult economy would threaten these benefits and negatively impact the operations, workforce and marketing of our casino hotel properties,” Giannantonio said. “Reductions in these benefits will also lead to reductions in consumer spending in the casino properties and other Atlantic City businesses, as well as the state and local taxes generated there. New Jersey’s standing as a national leader and pioneer in online gaming would also be greatly diminished, and would cede ground to other states in jobs, investment, and innovation.”
ROI-NJ profiled the rise of the sports betting industry in New Jersey in this recent story on BetMGM. https://www.roi-nj.com/2025/01/17/lifestyle/garden-state-parlay-jersey-city-perfect-home-for-betmgm-and-made-n-j-the-center-of-the-booming-sports-betting-industry/
