New Jersey is contemplating a substantial tax increase for online gambling operators, as proposed by State Senator John McKeon. The bill, S3064, put forward by McKeon, seeks to raise the tax rates for digital gaming platforms in the state to 30%, nearly doubling the current rates.
Senator McKeon, representing Essex/Passaic and serving as the vice chair of the Senate State Government, Wagering, Tourism & Historic Preservation Committee, introduced the bill without offering a detailed rationale for the tax hike. The move is expected to encounter resistance from the gambling industry in Atlantic City, prompting potential lobbying efforts.
Current Tax Rates and Revenue
Presently, online casino revenue in New Jersey faces a base tax rate of 15%, with an additional 2.5% directed towards the Casino Reinvestment Development Authority, totaling an effective rate of 17.5%. Similarly, online sports betting is subject to a 13% base tax rate, with an additional 1.25% for an effective rate of 14.25%.
Since the inception of online casinos in November 2013, New Jersey has amassed over $1.36 billion in taxes. Additionally, since the advent of mobile sports betting in the summer of 2018, the state has collected over $438 million in taxes, excluding the supplementary rates.
McKeon’s bill aims to bring New Jersey’s online gambling revenue tax rates more in line with those of neighboring states. For example, Pennsylvania imposes a 16% tax on online table games, 54% on online slots, and 36% on internet sports wagering. Meanwhile, New York proposes a 51% tax rate on online sports betting, with a proposed 30.5% rate for online casinos, although the latter is yet to be legalized.
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