New Jersey online casino games operators might see their taxes increase in the coming years, as NJ Governor Phil Murphy is proposing to raise the rate for online casinos and sportsbooks verticals starting in July, as part of his Summary of Budget Recommendations for FY2026 report.
Currently, New Jersey online casinos and sportsbooks operators are being taxed for 15% and 13%, respectively. With Governor Murphy’s proposition, the tax rate will increase up to 25%, almost doubling the current rate.
Governor Murphy stressed that the reason for the tax hike is to help generate revenue for the Garden State. Murphy noted that the proposal is expected to generate an additional $322.6 million for the Casino Revenue Fund. This results in FY2026 revenue projections to grow to $989.9 million, up 54.2 percent.
He also stated that the proposal will also impact Sports Wagering revenue deposited into the State’s General Fund and is expected to raise an additional $80 million in FY2026.
“In total, the proposed tax rate change will increase internet gaming and sports wagering revenues deposited into both the State’s General Fund and Casino Revenue Fund by $402.4 million,” Gov. Murphy added.
New Jersey Online Casinos Tax Hike Has Been A Long Time Coming
Local legislators have been eying to increase the taxes for online casinos and sports betting for a while. Last March, State Senator John McKeon of D-Essex/Passaic, introduced a bill to increase the tax rates to 30%.
The bill did not pass in time for 2024. However, McKeon predicted rates would rise sooner or later, before the 2025 budget went into affect:
“I’m disappointed that we didn’t get it done in time to be helpful this budget cycle. But there’s no doubt with the forecast for economic times in front of us that, ultimately, we will make some changes to the online gaming tax rate in our state,” McKeon added.
However, while the proposition will be discussed, it does not mean the tax rate increase will be a sure thing. A joint statement from Senator John Burzichelli and Senator Michael Testa expressed their concern about the potential adverse effects a tax increase would create for the industry’s long-term revenue growth.
“Simply put, doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk. Any effort to increase this tax on New Jerseyans threatens all of the progress New Jersey has made, especially at levels that would make New Jersey’s customers too heavily taxed. A tax increase would negatively impact jobs, industry investment, and our New Jersey customers, and it could affect future revenue growth for the state.”
What Do New Jersey Online Casino Operators Feel About the Potential Tax Hike?
Online slot games operators in New Jersey shared their sentiments regarding the potential tax increase. Tom Reeg, CEO of Caesars Entertainment, wasn’t concerned about tax hike,
“I think it’s a headline cycle we’re in. It’s a function of where state budgets are versus where they’ve been in the last couple of years,” Reeg stated during the company’s Q4 earnings call with their stakeholders.
Meanwhile, iDEA Growth, a non-profit seeking to grow jobs and expand online interactive entertainment, had a much stronger response. iDEA Growth called New Jersey’s legal online gambling market a “national success story” and is baffled by Gov. Murphy’s proposal.
Jeff Ifrah, iDEA Co-Founder and General Counsel, stressed that raising taxes only makes New Jersey’s market less competitive, driving players toward platforms that aren’t regulated and that the state can’t benefit from.
Ifrah also urged lawmakers to strengthen a “proven model.” That said, momentum is on the side of raising taxes, which further increased with Gov. Murphy’s proposal.
Last Updated on by jonathan r
