New Jersey To Raise Sports Betting Tax to 19.75%

The state of New Jersey is set to raise the internet gambling and sports betting tax to 19.75%. In February, Governor Phil Murphy proposed a 25% rate. 

Currently, in New Jersey, online sports betting is taxed at a rate of 13%, and online casino play is taxed at 15%.

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This story broke courtesy of The Press of Atlantic City. They said that five lawmakers confirmed the details to them. 

A budget must pass by July 1. 

"We want to be competitive," Murphy said. "We want to be fair to our taxpayers, and we want to be fair to those who participate in the industry."

Murphy continued, discussing how New Jersey's lawsuit paved the way for the legalization of online sports betting. 

"We're proud of the progress that we've made since we established ourselves back in 2018, and we want to further that progress," he said.

"We want to do it in a way that works, that's balanced for the participants, that works for the state and works for our taxpayers."

After 25% was pitched, the Casino Association of New Jersey president Mark Giannantonio said, "As evidenced in other jurisdictions, this type of tax hike will not yield such expected tax dollars to the state treasury because it will result in diminishing returns through a consumer shift away from the licensed and regulated providers and back to the unregulated and illegal, offshore online businesses from which the state derives no revenue."

Other States Changing Tax Laws

In addition to New Jersey, many other states are changing their sports betting tax law. 

• Maryland: Increased from 15% to 20%. 
• Massachusetts: Considering an increase from 20% to 51%. 
• Illinois: First 20 million wagers taxed at $0.25 each; $0.50 each after that. It was previously 15%. 
• Ohio: Increased from 10% to 20%. 
• Louisiana: Increased from 15% to 21.5%. 
• North Carolina: May increase to 36%. 

Ramifications of Changing Taxes? 

Fitch Ratings, a financial analytics firm, commented on this potential change. 

“Recent and proposed state sports betting tax hikes could dampen the online gaming sector’s positive growth momentum,” Associate Director David Lowenstein wrote to investors on June 16.

The iDevelopment and Economic Association also spoke out. 

"New Jersey’s legal online gaming and sports betting industry has been a national success story, generating billions in economic activity, supporting thousands of jobs, enacting regulation that protects consumers, and delivering significant tax revenue for the state," Jeff Ifrah, its co-founder, said in a statement.

"It is baffling why the governor would seek to undermine this by imposing even more taxes on an industry that is already exceeding its economic promise."

Additionally, the Sports Betting Alliance, a group comprising DraftKings, FanDuel, bet365, BetMGM, and Fanatics Sportsbook, has a letter on its website that customers can fill out, which will be sent to state legislators to request that the tax rate not be increased.