The new tax rate for online casino, sports betting and daily fantasy sports has passed the New Jersey legislature.
Both chambers passed the bill Monday afternoon. The Assembly approved the bill by a 45-33 vote, followed by a 25-14 vote in the Senate.
Gov. Phil Murphy is expected to sign the legislation, as raising the online sports betting and online casino tax rates was part of budget discussions.
The new rate of 19.75% in A 5803 was negotiated down from 25% in Murphy’s initial proposal.
Truist: online casino the largest slice
Barry Jonas at Truist noted in a report last week that he thinks operators can mitigate the increased tax rates by reducing promotions alone. Around 20% of the higher rate can be mitigated for the second half of this year. That should increase to about 50% of those costs in 2026.
Based on the last 12 months of results, New Jersey would have seen an additional $172 million in taxes at the new rate.
The two largest operators, FanDuel and DraftKings, would owe the biggest chunks, Jonas said. FanDuel would have paid another $67 million ($29 million from online sports betting and $38 million from online casino) while DraftKings would have paid an additional $56 million ($36 million for online casino, $20 million for sports betting).
BetMGM would have faced an additional $27 million in taxes, $22 million of which comes from online casino. Caesars‘ tax bill would have increased $18 million, $15 million from iGaming. Penn’s taxes would have risen $4 million, split evenly across both businesses.
What were those rates, again?
New Jersey was a first-mover on regulating and launching these markets. It did so at relatively friendly rates for the operators.
The NJ online casino tax rate is increasing from 15%. The Garden State originally taxed online sports betting at 13%. It initially taxed daily fantasy sports at 10.5%.
While no operator wants to see their costs increased, the 19.75% rate still seems relatively operator-friendly when considering the 51% rate in New York and some of the other increases seen across the industry this legislative season.
