The Garden State is considering an increase to the tax rate on both online NJ sports betting and casino gaming up to 30%.
Sen. John McKeon is listed as the primary sponsor of Bill S3064. However, there is no NJ sports betting and casino gaming bill summary.
It is possible the bill has not yet gone to the Office of Legislative Services (OLS) for drafting. LSR reached out to McKeon for comment Tuesday, but he has not responded.
NJ sports betting tax rate details
The current tax rate for online New Jersey sports betting is 14.25%. Neighboring New York (51%) and Pennsylvania (36%) have the two highest tax rates in the country.
Since New York launched online sports betting in January 2022, it has secured far more tax revenue than New Jersey through February 2024.
NY sports betting
- $39.2 billion in handle
- $1.73 billion in tax revenue
- 50.8% effective tax rate over that span
NJ sports betting
- $26.1 billion in handle
- $286.7 million in tax revenue
- 14.1% effective tax rate over that span
If New Jersey had been taxing at 30% over that span, its total revenue would be $609.7 million.
Online casino taxes
Online casino operations in New Jersey date back to 2013, with a lifetime total of $1.36 billion in taxes collected at an effective rate of 17.4%. Again applying that proposed 30% tax in retrospect, the state has theoretically failed to realize $980 million in additional revenue over that span.
Pennsylvania, which taxes online casino revenue at the highest commercial rate in the country, has collected more from that category since its own launch in 2019 ($2.18 billion) than New Jersey has going all the way back to 2013.
No tax rate reduction in New York
Previous attempts to lower the tax rate in New York via increasing the number of operators have proven unsuccessful.
Back in January 2023, DraftKings CEO Jason Robins suggested to Empire State regulators that without a reduction in tax rate, the operator might be “forced” to offer worse odds in New York sports betting.
Illinois also seeking tax hike
In Illinois, Gov. JB Pritzker has proposed raising the sports betting tax rate from 15% to 35% in his executive budget for fiscal year 2025.
In Ohio, Gov. Mike DeWine signed into law an increase in the tax rate on sports betting from 10% to 20% for the 2024-25 fiscal year.
Michigan and Kansas meanwhile have effective tax rates below 6% due to their allowance for promotional deductions. A similar framework in Pennsylvania reduces its 36% statutory rate down to about 24% effectively.
