New Jersey Senator Officially Introduces Bill To Raise Online Gambling Tax Rate To 30%

Eric Raskin

new jersey capitol building trenton

New Jersey, traditionally a trendsetter in the gambling space, is positioning itself to become a follower, a state trying to keep up with its neighbors.

State Sen. John McKeon formally introduced this week SB 3064, proposing an approximate doubling of the taxes New Jersey online gaming operators pay the state. The Garden State currently taxes on the low side — 14.25% for online sports betting and 15% for iCasino — while bordering states New York and Pennsylvania tax at 51% and 36%, respectively, for mobile betting.

Under McKeon’s bill, all online gaming revenue in New Jersey would be taxed at an even 30%.

As McKeon told New Jersey Monitor recently, New Jersey’s tax rates are “just not commensurate with where everybody else is, and we can use the revenues.”

Retail rates remain the same

The general details of the legislation were leaked in late-March; the full text of the bill is now available for the first time.

The bill amends legislation passed in 2013 to impose “an annual tax on Internet gaming gross revenues in the amount of 30 percent of such gross revenues which shall be paid into the Casino Revenue Fund,” while the previous tax rate, 15%, now appears in brackets. By contrast, “The 8 percent tax on casino gross revenues shall not apply to Internet gaming gross revenues.”

In other words, land-based casino gaming revenue would maintain its 8% tax rate, while online would double to 30%.

Similarly, 2018 legislation on sports betting is amended, with a note that in-person wagering still “shall be subject to an 8.5 percent tax,” while mobile wagering would bump from 13% to 30%, while maintaining “an additional tax of 1.25 percent which shall be remitted by the State Treasurer to the Casino Reinvestment Development Authority for marketing and promotion of the City of Atlantic City.”

All the same taxes would apply to the state’s horse racing operators that are involved in mobile sports betting.

New year, new tax rate?

If passed, SB 3064 would “take effect January 1 next following the date of enactment.”

The bill has been introduced in the Senate and referred to the Senate State Government, Wagering, Tourism, and Historic Preservation Committee.

Online gambling produced $414 million in taxes in New Jersey in 2023. So McKeon’s proposal would figure to add somewhere in the neighborhood of an additional $400 million.

With its far higher tax rate, New York, which does not regulate iCasino play, produced $861 million in tax revenue on online sports betting alone in 2023.

Even though state governments can always use additional tax dollars, an industry source told Casino Reports that McKeon’s bill would face an uphill battle in New Jersey because of the strength of the casino lobby in the state.