Increase in Internet Sports Betting Tax Proposal in New Jersey, Now at a Rate of 30%
The Gambling Taxing Game in the US: Double Trouble for Sports Betting Operators in New Jersey
It looks like the Garden State is gearing up for a financial boost from its gambling sector, as State Sen. John McKeon has introduced a bill (S 3064) that's going to crank up the operator tax rates on internet sports betting revenue and online casino earnings.
New Jersey joins the league of states, such as Ohio and Illinois, that have recently tightened their purse strings around sports betting operations. It's all about maximizing revenue while attempting to keep the industry afloat.
McKeon's new legislation aims to double the tax rates on both internet sports betting revenue and online casino earnings to a hefty 30%. If passed, this could mean a seismic shift for operators in the state, especially considering that New Jersey already collects a hefty 13% from sports betting apps and 8.5% from retail sports betting locations.
With New Jersey leading the charge for US sports betting after the Supreme Court's ruling in the Murphy vs. NCAA case, the proposed tax increase comes as no surprise to many industry observers. But just how will this impact New Jersey and its gambling operators?
Looking at fellow states like Ohio,Illinois, and New York, the taxing game is a mixed bag. For example, Illinois has introduced a per-wager tax of 25 cents for the first 20 million wagers, climbing to 50 cents after that. This is on top of a rather steep progressive tax on gross gaming revenue, reaching a whopping 40% for top-performing operators.
In contrast, New Jersey does not have a per-wager tax like Illinois, but instead taxes operators at 13% for online bets and 8.5% for in-person bets. The state focuses more on taxing revenue generated from GGR rather than per-wager taxes, creating a somewhat favorable environment for operators.
The question remains, will the proposed tax increase in New Jersey prove beneficial or detrimental for the state and its operators? As it stands, the Garden State has already collected at least $5 million in taxes from sports betting for 20 months in a row. Still, it has only topped the $20 million mark once, with an average monthly tax bill amounting to $10.9 million.
On the other hand, state tax receipts from internet casino gaming have consistently surpassed $20 million for the past 18 months. With an impressive $288.5 million in tax revenue for internet casino gaming in 2023 and $1.17 billion overall since its launch in 2013, it seems that the steady revenue stream from internet casino gaming might be more appealing to New Jersey lawmakers.
As the dust settles, it'll be fascinating to see how the proposed tax increases shake things up for sports betting operators in New Jersey. But one thing is certain, the US gambling landscape continues to evolve with each passing day as states leverage tax revenue to boost their public funds while attempting to foster a vibrant, profitable gambling industry.
As they say, it's always a gamble. In this case, it seems the gamble is on the growth and flexibility of sports betting operators in New Jersey. Will the proposed tax increase prove to be a double-edged sword, or will it lead to a new wave of growth for the industry? Only time will tell.
The proposed legislative change in New Jersey could potentially increase tax rates for both internet sports betting revenue and online casino earnings, possibly creating a new challenge for sports-betting operators in the state. This increase, if enacted, could potentially trigger a parlay of events, shifting the financial landscape of the gambling business within the state. Meanwhile, the tax revenue from sports betting and online casinos has shown varying results in other states, with some implementing per-wager taxes and others focusing on revenue-based taxes, highlighting the strategic decisions involved in finance management within the sports-betting industry. The impending decision in New Jersey represents a significant wager on the growth and adaptability of sports-betting operators, potentially leading to either a favorable outcome or potentially problematic consequences for the Garden State's gambling sector.
