New Jersey Budget Seeks to Almost Double Online Casino, Sports Betting Tax Rates

^{The New Jersey capitol in Trenton. Inside this building, lawmakers are looking for additional gaming taxes to help the state through stormy fiscal times ahead. (Image: Joseph Sohm / Visions of America / Alamy)}

New Jersey Gov. Phil Murphy just released his proposed budget for the 2026 fiscal year. It contains tax hikes for online casinos and sportsbooks, as NJ joins a growing group of states looking to bump up revenue from the gambling industry.

The new plan calls for a 25% tax rate on both casino game and sports wagering revenues, up from current rates of 15% on the former and 13% on the latter. This comes on the heels of Ohio governor Mike DeWine proposing a bump from 20% to 40%, after already doubling the rate from 10% in 2023. 

Additionally, Maryland governor Wes Moore is looking to double their rate from 15% to 30%, while Illinois bumped up last year from 15% to rates as high as 40%. New Jersey prides itself as “gambling friendly” and relatively speaking, they would remain a shade under half of New York’s 51% levy.

The proposal comes at a time of declining sports betting revenue in the Garden State. According to the budget document, NJ projects it will add $322.6 million to 2026 online revenues. 

These revenues get placed into a “Casino Revenue Fund,” and if true, it would bump the projected revenues in the fund by 54%. The sports betting rate hike would add $80 million in projected 2026 revenue in 2026 to the “State General Fund.” So add it all together, and its $402.4 million of added funds.”

Bet MGM Rallying Opposition to NJ tax hike

Needless to say, some of the casinos and their affiliated online gaming and sports betting arms did not take too kindly to the news. FanDuel (affiliated with Golden Nugget for gaming and the Meadowlands race track for sports betting) and DraftKings (Resorts) dominate the online space in New Jersey. 

A gaming analyst at Truist Securities suggested that as the best positioned players in the space, they might be ok with the hike mainly because it could have been an even higher tax when you see what’s going on nationally. As such, I have seen no official comment from either behemoth. What I did see was an action notice to fight this from BetMGM, affiliated with Borgata Casino. 

I got this email yesterday:

BetMGM players across New Jersey got emails like this one, encouraging them to publicly oppose the state’s proposed iGaming tax hike.(Image: BetMGM)

BetMGM ranked 3rd in the state in internet gaming revenue in January with a win of $28.4 million, vs. $49.7 million for FanDuel and $44.1 million for DraftKings. They were a much more distant third in January  online sports betting revenue at $7.4 million, dwarfed by $53.1 million at FanDuel and $35.6 million at DraftKings.

Caesars Palace, which ranks 5th in NJ in both online gaming and sports betting, coincidentally had a quarterly earnings conference call as the tax hike news broke. They had a rather sanguine reaction, chalking it up to a continuing issue in state budgets across the country.

Will the tax hike pass?

Well, it's an election year in New Jersey. Gov. Murphy is term-limited and can not run for reelection. Meanwhile Legislature and Senate seats are on the ballot as well. Two state senators who sit on the Senate Budget Committee, John Burzichelli (D-Paulsboro) and Michael Testa (R-Vineland) issued the following statement: 

“Simply put, doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk. Any effort to increase this tax on New Jerseyans threatens all of the progress New Jersey has made, especially at levels that would make New Jersey's customers too heavily taxed,” Burzichelli and Testa said. “A tax increase would negatively impact jobs, industry investment, and our New Jersey customers, and it could affect future revenue growth for the state.”

So yes, this looks like far from a done deal. It all must get done by the end of June. The race for gubernatorial nominations has already kicked into high gear judging by ads everywhere here. I imagine the candidates will all need to chime in on this pretty soon.