If one New Jersey state senator has his way, online sports betting and casino gaming in the state would be paying a lot more in tax.
NJ state Sen. John McKeon is the primary sponsor of Bill S3064, which advocates for raising the tax rate on both online sports betting and casino gaming to 30%, as reported by Legal Sports Report.
That would more than double the effective tax rate paid by online sports betting operators right now, which is 14.25%. It would also nearly double the online casino tax rate, which is 15% plus another 2.5% that goes to the Casino Reinvestment Development Authority, for an effective total rate of 17.5%.
New Jersey’s tax rate on online sports betting looks strikingly low when compared to neighboring states. In New York, the rate paid is 51% while Pennsylvania operators pay 36%. Those are the two highest online gaming tax rates in the country, although it’s worth noting that the state’s allowance for promotional deductions reduces that to an effective tax rate of 24%.
New York has taken $1.73 billion in online sports betting tax revenue from $39.2 billion in handle since launching in January 2022, whereas New Jersey has taken just $286.7 million in tax revenue from $26.1 billion in handle.
When it comes to online casino operations, which date back to 2013 in the Garden State, the total tax revenue taken is $1.36 billion. Pennsylvania, whose online casino tax rate is the highest in the country, has collected $2.18 billion in online casino revenue in just five years.
New Jersey not the only state with a tax hike proposal
Proposals to raise tax rates in the industry aren’t specific to New Jersey.
In Illinois, Gov. JB Pritzker has advocated for the sports betting tax rate to be more than doubled from 15% to 35% in his executive budget for fiscal year 2025, while Ohio Gov. Mike DeWine approved a sports betting tax bump from 10% to 20% last year.
Garden State’s iGaming and sports betting performing well
The timing of McKeon’s bill is notable given that New Jersey’s gaming and betting industry is performing strongly early in 2024.
Last month, official New Jersey Division of Gaming Enforcement figures reported that the Garden State had taken a new state record of $1.72 billion in sports betting handle for January, the fifth consecutive month the state had taken more than a billion dollars in bets and a 136% year-over-year spike.
Casinos and gaming operators recorded a win of $183.3 million in January, also a new monthly record and a 19.9% year-over-year rise.
