New Jersey State Senator John McKeon (in photo above), has proposed a bill that could potentially double the current tax rates for online gambling operators in the state. The bill, identified as S3064, aims to increase tax rates on both online casinos and sportsbooks to a staggering 30 percent. This move comes amidst growing discussions around revenue generation and taxation within the state’s gambling industry.

McKeon, who represents Essex/Passaic, serves as the vice chair of the Senate State Government, Wagering, Tourism & Historic Preservation Committee. However, the bill seemingly lacks an explanation for the proposed tax increase, which is likely to face opposition from the state’s gambling industry and draw lobbying efforts from Atlantic City’s casinos.

Currently, online casino revenue in New Jersey faces a base tax rate of 15 percent, with an additional 2.5 percent directed towards the Casino Reinvestment Development Authority. This results in an effective total rate of 17.5 percent. Meanwhile, online sports betting is subjected to a 13 percent base tax rate, with an additional 1.25 percent for an effective rate of 14.25 percent.

New Jersey’s gamble on tax reform

Since the launch of online casinos in New Jersey in November 2013, the state has accumulated over $1.36 billion in taxes. Similarly, since the introduction of mobile sports betting in the summer of 2018, New Jersey has collected over $438 million in taxes, excluding the additional rates mentioned earlier.

If passed, McKeon’s bill would align New Jersey’s online gambling revenue tax rates more closely with those of neighbouring states. For instance, Pennsylvania imposes a 16 percent tax on online table games, 54 percent on online slots, and 36 percent on internet sports wagering. Meanwhile, New York taxes online sports betting at 51 percent of gross revenue. A 30.5 percent rate for online casinos in NY has been proposed, but this vertical has not been legalized yet.

This proposed tax hike is a bold move that could have significant implications for the online gambling industry in New Jersey. It remains to be seen how this will play out, but one thing is certain – the landscape of online gambling in the state could be set for a major change. As the discussions continue, all eyes will be on New Jersey as it navigates this complex and controversial issue.

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