New Jersey Gambling Industry Fights Back Against Suggested Tax Increase

New Jersey’s gambling industry opposes Governor Phil Murphy’s plan to increase taxes on online gaming and sports betting. The proposal, which is part of the state’s $58 billion budget, aims to raise tax rates on internet gambling and sports betting from their current 15% and 13% to 25%.

Experts Warn NJ Gambling Tax Increase Could Hurt Jobs, Investment, and Players

Murphy’s team claims the tax increase could bring in an extra $402.4 million. However, industry experts caution that such a hike might harm the state’s booming gambling sector, resulting in fewer jobs less investment, and weaker incentives for customers.

Casinos and online betting companies have spoken out against the proposal, with industry advocates and representatives pointing out the dangers of hiking taxes in a competitive market, reported the Press of Atlantic City. Bill Pascrell III, a well-known gambling industry advocate, stressed the potential harm to the industry and revealed plans to launch a forceful lobbying and public awareness drive to fight the proposal.

The Casino Association of New Jersey also shared its concerns, cautioning that the tax increase might upset Atlantic City’s gaming and tourism sector. With land-based casino earnings already dropping, spokespeople claim that extra tax loads on digital platforms could set off a chain reaction, further weakening the industry.

Online sportsbook operators, including big names like FanDuel, DraftKings, and BetMGM, have started to rally opposition. Some companies have reached out to their customers. They have warned that the suggested tax hike might result in fewer special offers, less favorable betting odds, and a move toward unregulated gambling sites that work outside of protective regulations.

Murphy’s Gambling Tax Plan Faces Bipartisan Resistance

Even though Democrats control New Jersey’s Legislature, Murphy’s tax plan was met with doubt from lawmakers on both sides. Senators John Burzichelli (D-Salem) and Michael Testa (R-Cape May) have both spoken against the proposal. They argue that raising taxes on a successful industry would put jobs and future investments at risk.

Senator Vince Polistina (R-Atlantic) thinks lawmakers should think about putting into action the 5% tax cut across all areas that Murphy had talked about before instead of making taxes higher. He mentioned that when taxes were lower in the past, it made people want to put money into Atlantic City’s gaming business. He warned about making the state less appealing to gambling companies since New York’s gaming industry is getting bigger.

Experts caution that the suggested tax hike, if put into action, could have a major effect on both businesses and customers. A study from Jefferies Equity Research suggests that Flutter Entertainment, which owns FanDuel, might lose about $106 million. Likewise, Entain, which owns BetMGM, could see its earnings drop by $62 million. 

Furthermore, this change in tax rules might push more people to bet on unlicensed offshore sites, which do not offer the same protections for users as the legal betting companies in New Jersey do.

Although Murphy’s budget plan includes the tax increase, its success is not guaranteed. A comparable proposal from last year aiming to bump up gambling tax rates to 30%, has stayed stuck in committee. The new proposal might end up the same way if the industry keeps fighting against it.