New Jersey Proposes Changes to Online Gambling Taxes for Gaming and Sports Betting

While the image depicts the NJ Governor’s Office, the political landscape in New Jersey is increasingly shaped by the complex fiscal regulations surrounding the gaming industry, specifically regarding how online gambling taxes impact state revenue and local economy.

New Jersey is contemplating a significant increase in taxes levied on its burgeoning online gaming and sports betting industries. This potential shift, proposed by Governor Phil Murphy as part of a record-high spending plan for the 2026 fiscal year, aims to generate substantial revenue for the state while simultaneously sparking debate within the casino industry.

Governor Murphy’s Ambitious Spending Plan

Governor Phil Murphy recently unveiled a $58.1 billion expenditure plan for the upcoming fiscal year – a figure unprecedented in New Jersey’s history. A key component of this plan involves raising taxes on online casino operators and sportsbooks, a move intended to bolster funding for crucial areas such as property tax rebates, reproductive healthcare initiatives, and the reduction of a $1.2 billion structural deficit.

Beyond online gambling, Murphy’s proposal includes increasing taxes on alcohol, tobacco, and recreational cannabis sales. Specifically, the tax on adult-use marijuana would rise from $2.50 to $15 per ounce, cigarette taxes would increase by 30 cents per pack, and taxes on alcoholic beverages would see a 30% surge.

Furthermore, the governor suggests doubling the tax on property sales exceeding $1 million to 2%, and to 3% on properties valued above $2 million. This broad-based tax increase reflects the state’s need for increased revenue across various sectors.

Proposed Tax Rate Hike for iGaming and Online Sports Wagering

Governor Murphy has urged the state legislature to enact legislation that would raise the tax rate on online casino gaming and online sports wagering to 25%. Currently, online casinos contribute 15% of their gross gaming revenue (GGR) to the state treasury, while online sportsbooks are subject to a 13% tax. The proposed increase aims to generate an additional $402.4 million for the 2026 fiscal year.

While New Jersey’s overall state income tax stands at 10.75% – the fourth highest in the nation – the state has been relatively accommodating to online casino and sports betting operators with lower tax rates compared to neighboring states like Pennsylvania. In Pennsylvania, internet slot machines are taxed at a staggering 54%, and online sportsbooks face a 36% tax rate.

Industry Concerns and Potential Impacts

The Casino Association of New Jersey (CANJ), representing the nine casinos in Atlantic City, has voiced strong opposition to Governor Murphy’s tax hike proposal. CANJ President Mark Giannantonio argues that such a move would have detrimental effects on brick-and-mortar casinos.