New Jersey’s online gambling operators can rest easy for a while as lawmakers don’t envision a tax increase for 2025. However, the discussions will likely continue into the following year.
S3064, a measure sponsored by Senator John McKeon, sought to increase New Jersey’s online gambling taxes. If passed, the bill would have increased the online casino tax rate from 15% to 30% and the online sports betting tax rate from 13% to 30%.
However, the change was not outlined in the state budget proposal for the 2025 fiscal year, to McKeon’s dismay. In an interview with PlayUSA, the Senator admitted that he is disappointed that NJ lawmakers couldn’t “get it done in time to be helpful this budget cycle.”
However, McKeon is certain that at least some changes to the online gambling taxes are inevitable, considering the shifting economic situation.
New Jersey Has Some Very Low Tax Rates
Higher online gambling taxes would align New Jersey with other states where online casino and sports betting are legal. Pennsylvania, for example, has a 54% tax on online slots and a 51% tax on online sports betting. New York’s online sports betting tax rate of 51%, on the other hand, has remained one of the harshest in America.
In the meantime, states across the USA have been increasing their online casino and sports betting taxes. Illinois just increased its online sports betting tax rate from 15% to a graduated rate between 20% and 40%. Last year, Ohio doubled its tax from 10% to 20%.
However, New Jersey, which pioneered online gambling, has kept its tax rate more or less unchanged for over a decade. McKeon believes that the NJ tax rates are “clearly and objectively very low.”
Higher Taxes Would Hurt Some Properties
However, there are some concerns too as higher taxes might hurt less well-off gambling properties. Meadowlands Racetrack, for example, would be devastated by such a change, according to its owner, Jeff Gural.
Gural noted that some venues, including the racetrack, “totally rely” on sports betting revenue to offset losses from races. As a result, a tax increase could be “catastrophic,” he warned.
McKeon, on the other hand, is certain that the number of Atlantic City casinos will inevitably decrease, with or without higher online gambling taxes. He theorized that the nine AC casinos are going to consolidate as online gambling grows.
In any case, lawmakers seem keen on increasing the taxes, although they are not certain how much to increase them yet. This means that the discussions and hearings will continue.
McKeon’s bill has not yet sparked any public legislative discussion but continues to gain traction. The Senator hopes that the matter will continue to be discussed once the legislature reconvenes in the autumn.