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Governor Phil Murphy has been working with state lawmakers on higher tax rates for online gambling. They’re still hammering out details but seem close to a deal.
Murphy originally wanted a 25% tax rate when talks started. That’s much higher than what operators pay now.
The state legislature needs to finalise the budget proposal by June 30. So negotiations are getting urgent.
The state currently taxes iGaming at 15% and online sports betting at 13% on adjusted revenues. Those rates are relatively low compared to some other states.
New Jersey isn’t alone in this trend. Illinois, Maryland and Louisiana have all raised their sports betting taxes recently.
The projected increases could bring in an additional $402.4 million for the state. That’s serious money for any budget.
Reports suggest the final rate will be under 20%, despite Murphy’s original 25% target. The Press of Atlantic City says it’ll be 19.75%.
Other local sources mention rates as low as 18%. But even the lower end represents a significant jump from current levels.
Both iGaming and sports betting would face the same new rate. Right now, they’re taxed differently.
At 19.75%, FanDuel would have paid an additional $67 million last fiscal year. DraftKings would have owed $56 million more.
Maryland bumped its sports betting tax from 15% to 20%. Louisiana went even higher, jumping from 15% to 21.5%.
Illinois took a different approach. They added a $0.25 fee per wager on the first 20 million bets an operator takes. After that, it goes to $0.50.
The Illinois model has real consequences. Both DraftKings and FanDuel will charge customers a $0.50 transaction fee for all bets placed in that state.
New Jersey’s approach sticks with percentage-based taxes rather than per-bet fees. But the rate increase still puts pressure on operators’ margins.
The trend across multiple states suggests regulators see online gambling taxes as an easy revenue source. Operators have been profitable enough to absorb these increases so far.
Whether that continues depends on how many states follow suit and how high rates eventually go.
Following this news, iGaming supplier RubPlay has launched in the New Jersey market by adding several games to BetMGM’s New Jersey platform. Titles now available in the state will include Immortal Ways Sweet Coin, Diamond Explosion Patriots and Gummy Giga Match.
Prior to entering the New Jersey market, RubPlay entered the Ontario market via a signed deal with BetMGM in the region and recently launched its online casino content on QTech’s global platform.
