New Jersey nears tax hike on iGaming and sports wagering

While the tax rate for both forms of gaming is likely to increase, the new rate is reported to fall under 20% despite Governor Phil Murphy seeking a 25% tax heading into the session.

New Jersey Governor Phil Murphy and state lawmakers have reportedly agreed to increase the tax rate of adjusted revenues for both iGaming and sports betting, potentially joining states such as Illinois, Maryland and Louisiana in raising the tax on sports wagering. 

According to local reports, Governor Murphy and fellow lawmakers are still discussing the legislation, with a finalized version of the state budget proposal required by June 30. 

While the tax rate for both forms of gaming is likely to increase, the rise is likely to fall under 20% despite Governor Murphy seeking a 25% tax rate heading into the session.

New Jersey currently taxes iGaming and online sports wagering at a rate of 15% and 13% on adjusted revenues, respectively, with the proposed increases projected to generate an additional $402.4m for the state. 

The Press of Atlantic City has reported the new rate will be set at 19.75%, while other local sources have discussed a tax rate as low as 18%. 

Good to know: New Jersey Senator Kristin Corrado’s legislation which looks to prohibit proposition betting on collegiate sports and protect student-athletes across the state passed through the State Government, Wagering, Tourism & Historic Preservation Committee on June 20

At the adjusted rate of 19.75%, FanDuel would have paid an additional $67m to state regulators in the previous fiscal year while DraftKings’ tax payments would have increased by $56m. 

Maryland and Louisiana increased its rates on sports betting taxes from 15% to 20% and 21.5%, respectively, while Illinois chose to add a $0.25 per wager tax on the first 20 million bets an operator takes in, increasing to $0.50 thereafter. 

In response to the decision from Illinois lawmakers, both DraftKings and FanDuel will implement a $0.50 transaction fee for all wagers placed within the state. 

Kirk Geller

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