New Jersey’s Online Gambling Tax Hike Faces Strong Industry Opposition

New Jersey Governor Phil Murphy has proposed a significant tax increase on online sports betting and internet gambling, sparking pushback from major industry players. The plan, introduced as part of the state’s 2026 fiscal budget, would raise tax rates on these sectors from 13% and 15% to 25%, respectively. This move is expected to generate an additional $402.4 million in revenue annually, but critics warn it could jeopardize jobs, investment, and the state’s gambling market stability.

Industry Leaders Push Back Against Proposed Tax Hike

The Casino Association of New Jersey (CANJ) and major sports betting firms, including FanDuel and BetMGM, have strongly opposed the measure. CANJ President Mark Giannantonio called the proposal “ill-advised”, warning that it would “threaten the stability of Atlantic City’s gaming and tourism industry, as well as the industry’s workforce”.

Online gambling operators have also taken their concerns directly to customers. FanDuel and BetMGMl both sent out emails urging players to contact state representatives and oppose the tax hike, warning that increased taxes could reduce promotional offers and worsen betting odds.

Lobbyists and industry analysts fear that these tax increases could drive consumers toward offshore and unregulated gambling platforms, reducing overall tax revenue. Bill Pascrell III, a well-known industry lobbyist, stated, “If New Jersey does this easily, it’s also liable to happen in other states”, emphasizing the potential for broader industry-wide impacts.

Lawmakers Express Bipartisan Concerns

The tax proposal has encountered resistance from both Democrats and Republicans in the New Jersey Legislature. Senator John Burzichelli (D-Gloucester/Salem/Cumberland) and Senator Michael Testa (R-1) issued a joint statement criticizing the plan, arguing that “doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk”.

Lawmakers fear that higher taxes could slow the growth of the state’s gambling market, which has played a key role in New Jersey’s economic recovery post-pandemic. Testa warned that Atlantic City’s casino industry, which has already struggled to return to pre-COVID revenue levels, could face further setbacks if the tax hikes pass.

Comparing New Jersey’s Tax Rate to Other States

Supporters of the tax increase point out that New Jersey’s current tax rates are lower than those of neighboring states. New York, for example, taxes online sports betting revenue at 51%, which is the highest rate in the U.S. Meanwhile, Pennsylvania imposes a 36% tax on online sports betting.

However, opponents argue that these comparisons do not fully account for market differences and consumer behavior. New Jersey, as one of the oldest regulated gambling markets in the U.S., relies heavily on its competitive tax rates to maintain its status as a gambling hub. Raising taxes too aggressively could drive bettors to states with lower rates or unregulated markets.

What’s Next for the Proposal?

Governor Murphy’s budget proposal must be finalized by June 30, 2025, leaving several months for negotiations. Industry leaders, lawmakers, and lobbyists are expected to continue pushing back against the tax hikes, with potential compromises—such as a lower increase to 20% instead of 25%—being discussed.

As debates unfold, the outcome of this proposal could have long-term implications for New Jersey’s gambling industry and national regulatory trends. Whether the tax hike moves forward as planned or faces adjustments, the fight over gambling taxation is far from over.

Source:

New Jersey’s Proposed Tax Hike on Online Gambling Sparks Industry Backlash, World Casino Directory, February 27, 2025.