New Jersey Senator formally introduces bill to hike online tax to 30%

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Currently, online gambling and sports betting are taxed at 15% and 13% of gross gaming revenue respectively.

Senate Bill 3064 was formally introduced on 8 April, after being filed last week. The bill was referred to the Senate State Government, Wagering, Tourism & Historic Preservation Committee.

If enacted the bill would amend Section 17 of P.L.2013, c.27 (C.5:12-95.19), which specifies the online gambling tax amount. Section 7 of P.L.2018, c.33 (C.5:12A-16), which addresses sports wagering tax, would also be changed.

Should lawmakers approve the proposal, it would take effect on next 1 January that occurs after the date of enactment, per the bill text.

New Jersey gambling tax hike: How does it compare?

A 30% rate would put a significant burden on New Jersey’s 18 mobile sportsbooks, raising taxes to among the highest in the US. New York’s 51% sports betting tax rate is currently the highest in a competitive market, followed by Pennsylvania’s 36% GGR levy.

A number of other states such as Delaware, New Hampshire and Rhode Island tax operators between 51% and 50% of GGR, but all run monopolies through state lotteries.

For internet casino, New Jersey current has one of the lowest tax rates, and 30 igaming sites currently active. A 30% GGR tax would put the state above Connecticut (18% of GGR rising to 20% after five years), Michigan (20%) and West Virginia (15%).

Pennsylvania’s 54% tax on slots remains the highest, though table games are taxed at 16%.

Has Ohio set a precedent for tax raises?

Should New Jersey move ahead with Senator McKeon’s plans, it would follow Ohio in doubling its tax rate.

In July last year Buckeye State Governor Mike DeWine increased the tax rate in his 2024-25 budget, from 10% to 20%.

DeWine’s relationship with the industry soured just days after sports betting launched, namely due to advertising. The state Casino Control Commission has since been quick to crack down on a perceived oversaturation of sportsbook marketing.

New Jersey under the spotlight

New Jersey’s gambling industry has been the subject of much discussion in 2024 so far. In January, Senator Joseph Pennacchio re-introduced a bill to launch racetrack slots and limit advertising. The bill was introduced several times dating back to 2014, and had failed to reach further than committee stage in 2020 and 2022.

Later that month, research from the National Economic Research Associates – commissioned by the Campaign for Fairer Gambling – revealed New Jersey’s igaming market to be “detrimental” for the state’s economy. This is in spite of its positive tax contributions, which the study claims were “cancelled out” by the growing cost of gambling harm.

This contradicts the 2019 study compiled by Dr Alan Meister of Meister Consulting and Gene Johnson of Victor Strategies for iDEA Growth. Internet casino alone generated $401.0m in employee wages and 6,552 full-time jobs between 2013 and 2018.

Over that five-year period, the study says, legal igaming was responsible for $259.3m in tax revenue to state and local governments, including $178.9m in gaming tax.

New Jersey’s gambling revenue reached new heights in 2023, hitting $5.78bn – a new record. For January alone, numbers remained high with $559.1m in revenue, up 28.0% year-on-year.

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