John McKeon, a senator in the State of New Jersey, has introduced a new bill which proposes a significant increase in the tax rate for online gambling and sports betting, bringing the figure to 30 percent.

The current tax rate for online gambling in New Jersey is 15 percent of gross gaming revenue, while the tax rate for sports betting is 13 percent of gross gaming revenue. The new bill, which bears the name of “Senate Bill 3064”, was filed two weeks ago and then formally introduced on 8 April. After that the bill was referred to the Senate State Government, Wagering, Tourism & Historic Preservation Committee.

The new bill basically amends two sections of the current legislation, Section 7 and Section 17, which stipulate the tax amount for sports wagering and online gambling, respectively. The proposal would take effect on the next 1 January that comes after the day of approval.

Still Lower Than Other States

The 30 percent tax rate would represent a drastic increase from the current rate in New Jersey, but it would still be lower than the tax rates established in other American states for online gambling and sports wagering.

New York for instance has a tax rate of 51 percent for sports betting, the highest in any competitive market in the United States. Pennsylvania comes in second place with a tax rate of 36 percent of gross gaming revenue.

States such as Delaware, New Hampshire and Rhode Island have tax rates above 50 percent of gross gaming revenue, but these states still run monopolies through state lotteries and don’t have competitive markets.

The current tax rate for online gambling in New Jersey is among the lowest in the country, with the state having 30 iGaming websites currently licensed and active on its competitive market. Connecticut has an 18 percent tax rate for online casinos, which is set to rise to 20 percent after five years, Michigan has a tax rate of 20 percent, while West Virginia takes 15 percent of gross gaming revenue from its online casinos.

The highest tax rate in the business remains the 54 percent imposed in Pennsylvania for slots, but that state seems to favor table games which have a tax rate of just 16 percent.

Ohio is an example of an American state that has recently increased its tax rate for online gambling and sports betting. In July 2023 Mike DeWine, the governor of Ohio, increased the tax rate from 10 percent to 20 percent.

Source: “New Jersey senator formally introduces bill to hike online tax to 30%“. iGaming Business. April 11, 2024.

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Representatives from leading trade associations in Italy’s gambling industry united in a resounding voice at the “Game: One Market, One Reorganization” conference by the Milton Friedman Institute. The participants highlighted concerns over the government’s proposed exorbitant increase in license fees, urging for correct and uniform regulatory and economic policies.

Attendants Highlighted Worrying Industry Trends

The event drew united representatives from leading associations, with Alessandro Bertoldi, Executive Director of the Milton Friedman Institute, presiding over the conference. Bertoldi emphasized the unjustified drastic spike to €7 million ($7.66 million) from 2018’s €200,000 ($392,000) could have a lopsided impact on market dynamics, legality, and consumer protection.

The regulatory interventions that the Government is preparing will once again create disparities by favoring the illegal market and heavily conditioning the free market.

Alessandro Bertoldi, Milton Friedman Institute Executive Director

Emmanuele Cangianelli, President of the Italian Association of Public Games Operators, advocated for an integrated overhaul of gaming distribution channels and products. He urged clear regulations on payment services to bolster online gaming, emphasizing the importance of preserving the uniqueness of concession titles while offering multi-channel consumer choices in legal gaming.

Geronimo Cardia, President of ACADI, Italy’s Association for Slot Machine Vendors, lamented the sector’s decade-long struggle due to fragmented and partial interventions, emphasizing the negative impacts on public interests, legal compliance, and employment levels. He stressed the detrimental effects of prioritizing remote gaming reorganization over retail, reducing revenues, compromising player protections, and stifling SMEs.

Smaller Businesses Will Suffer the Most

These were far from the only concerns, as other representatives underscored the significance of recognizing small and medium-sized gaming enterprises, highlighting the sector’s economic contribution and employment opportunities. They urged inclusive policies benefiting diverse operators, noting that the drastic fee increase would reduce active operators to 20, down from the present 91.

Stakeholders also used this opportunity to reiterate their opinions on Italy’s blanket ban on gambling advertising, arguing that it hurt the competitiveness of licensed operators and was partly responsible for the proliferation of black market players. The industry united in support of small and medium-sized businesses, most susceptible to regulatory uncertainties.

The legal gaming sector expresses its disappointment at the missed opportunity for an organic overall and coordinated reorganization.

Moreno Marasco, Logico President

The united front of industry representatives conveyed a clear message urging the government to adopt comprehensive, fair, and cohesive policies that uphold legality, support diverse operators, and prioritize consumer welfare in its approach to the sector’s reorganization. However, the Italian government has not proven receptive to industry input and may push on with its reforms regardless of stakeholder warnings.

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A recent Ohio bill dubbed House Bill 33 proposes some drastic changes to how the state’s sports betting industry should be taxed. Under the measure, sportsbooks will have to pay 20% of their revenue in taxes starting 2024. Needless to say, not everyone is happy.

A Summary of the Events

Currently, sports betting operators need to provide 10% of their revenue to taxes, meaning that the new bill would double the taxation rate. Originally proposed in February this year, the increased tax was signed off on the budget earlier this month.

Prior to that, the House of Representatives tried to promote a version of the 2024-25 budget that did not include the increased tax. However, the State Senate eventually amended the budget and brought the tax increase back.

The problem is that the high taxes may have an adverse effect on the industry, sports betting proponents argue. According to some, high taxes will make the Buckeye State much less appealing to gambling companies.

High Taxes May Alienate Operators

Ohio is the seventh-largest state in terms of population. With a fair tax rate of 10%, it is currently very appealing to wagering companies. Because of that, there are currently 18 sports betting brands offering betting on sports in the state, with another four waiting to launch.

Unfortunately, drastic changes risk alienating companies. While the state would theoretically receive twice the money it gets through taxes, companies may opt to quit Ohio if the conditions aren’t suitable for running a sustainable business.

In addition, critics pointed out that Ohio would become less appealing to new companies entering the state. This means that the Buckeye State would miss out on millions in licensing fees.

Dann Dodd Is Very Pessimistic about the Changes

Former State Rep. Dann Dodd addressed the doubled tax, slamming the state for introducing a measure that may strengthen the “oligopoly” that casinos and racinos have. He pointed out that the original license framework was designed to inhibit the influence of these properties, not bolster them.

In addition, Dodd pessimistically believes that as many as half of the brands currently offering products in Ohio may exit the market within 12-18 months. He also noted that the state will lose money in licensing fees.

Dodd’s words were echoed by Americans for Tax Reform, which scrutinized the efforts to increase taxes in Ohio. The organization lambasted the Buckeye State for its decision to become one of the less welcoming states to sportsbooks.

The organization pointed out that the measure “would take Ohio from having one of the lowest tax rates to the third highest in the US – higher even than Illinois.”

Critics are conclusive that Ohio doesn’t even necessarily need the extra money and that the tax hike is an unnecessary risk that can only hurt the economy.

Despite the criticism and warnings, Ohio predicts that the measure will increase the state revenue.

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The New South Wales (NSW) government is mulling scrapping its planned increase to the pokies tax that was expected to enter into force in July and level the tax rate of machines at casinos with that levied at clubs and pubs.

Review the Impact on Casinos

The announcement from the new premier, Chris Minns, that taxing arrangements need to be sustainable hints that the NSW government is considering scrapping the planned tax changes announced in December.

At the end of last year, the former state government announced tax changes that sought to raise an extra AU$364 million ($245.7 million) into the state’s coffers over three years by leveling the tax on gambling machines at casinos with that levied on those in clubs and pubs.

Admitting that the tax hike is important to the state’s bottom line, the NSW government believes it would have a serious impact on casinos.

“We need to make sure that when we do impose a new tax in New South Wales, the ability to pay is there,” Minns told reporters from ABC News, explaining that the government needs to assess what the impact would be on employment, especially in areas that require high-skilled labor such as gaming and casinos.

The announcement comes just a day after Star Entertainment revealed it was experiencing “a significant and rapid deterioration” of operating conditions due to regulatory restrictions and a decrease in consumer spending.

Star said it would cut 500 jobs mostly from its Star Sydney casino and freeze the salaries of non-unionized staff in an attempt to achieve AU$100 million ($67.5 million) in annual savings as the business is staring down the barrel of an AU$1.3 billion ($877.5 million) loss.

Following the casino’s announcement, United Workers Union called on the government “to revise its proposed tax to prevent further jobs being cut at The Star Sydney” and the government has heard the call.

Tax Policy Lacking Due Diligence

Minns, who led Labor to victory against the Perrottet government in March, also criticized the former government for lacking due diligence in its tax policy, claiming that his government was “left with that legacy” after taking over last month.

The chief advocate for Alliance for Gambling Reform, Tim Costelo, does not believe that The Star should be made any concessions, adamant that “if they can’t make a profit without money laundering and praying on problem gamblers, they really should get out of business.”

The Star and its rival Crown were subjected to intense scrutiny and heavy financial penalties after inquiries into their licenses uncovered they enabled money laundering and had operational weaknesses. Star says that it would be going ahead with the job cuts regardless of whether they will face tax hikes or not.

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