NJ Gov. Murphy Proposes Raising Online Gaming and Betting Tax

New Jersey’s governor is eyeing an iGaming tax hike to address the state’s financial needs. This mirrors proposals in other states, which have also been considering tax increases.

Governor Murphy Wants to Raise the iGaming Tax

New Jersey has historically been one of the most lenient states in terms of gambling taxes. As one of the sports betting and iGaming pioneers, it has cemented itself as a very gambling-friendly state.

Governor Phil Murphy is now looking to tap into the industry’s success by raising the tax on iGaming and online sports betting. In his unprecedented $58.1 billion expenditure plan for 2026, he cited a tax rate increase as something that could support the projected spending.

If his proposals are put into effect, New Jersey would not only increase its iGaming and online sports betting tax but also the tax on recreational cannabis, tobacco and alcohol. Gov. Murphy is also considering an increase in the property sales tax.

New Jersey Is Not the Only State to Consider Higher Taxes

Gov. Murphy promoted an online gaming and sports betting tax of 25%, which would mark a significant increase from the current rates. The change, according to the governor, could generate an additional $402.4 million in government revenue for 2026.

For context, the Garden State takes a 15% cut off the iGaming revenue and a 13% cut off the revenue generated by online sports betting.

New Jersey’s current iGaming and online sports betting tax rates are remarkably low compared to many others. New York, for example, boasts a staggering 51% tax rate on sports betting GGR. Pennsylvania, on the other hand, taxes iGaming at 54% and online betting at 36%.

The tax hike suggestion mirrors similar proposals in other states, which have or are considering increasing their taxes on certain gambling products. Ohio, for example, recently mulled over yet another drastic hike. The state, which doubled its sports betting tax in 2023, considered yet another doubling, which would bring the tax to 40%.

Industry Stakeholders Warn Against the Tax Hike

Industry stakeholders immediately took a stance against Gov. Murphy’s tax hike proposal, arguing that it could have a significant economic impact. The Casino Association of New Jersey pointed out that Atlantic City’s nine casinos have long depended on their iGaming partners to popularize their products and bring in additional revenue.

If the tax hike is approved, it would jeopardize cross-marketing efforts and would negatively impact gaming as a whole, stakeholders argued.

The proposal came soon after the New Jersey industry published its January report, outlining a slight decline in revenue. The decrease was due to slower betting figures and was partially offset by favorable casino and iGaming metrics.