New Jersey Governor Phil Murphy has proposed a significant increase in taxes for online gambling operations as part of his executive budget proposal. The plan calls for a 25% tax rate on both mobile sports betting and online gaming, up from the current rates of 13% and 15%, respectively.
The numbers game
Murphy’s proposal aims to generate an additional $402 million in tax revenue; of this amount, $322 million would come from online casinos, while sports wagering would contribute $80 million. When including existing investment taxes, the effective tax rates would rise to 26.25% for sports betting and 27.5% for online gaming.
Industry reactions
The proposed tax increase has received criticism from industry groups. Jeff Ifrah, co-founder and general counsel of iDEA, an online gaming trade group, expressed his concerns:
“New Jersey’s legal online gaming and sports betting industry has been successful, generating significant economic activity and tax revenue. It’s puzzling why the governor would propose additional taxes on an industry that is already performing well.”
Ifrah also noted, “Raising taxes could make New Jersey’s market less competitive, potentially driving players to unregulated platforms.”
Mark Giannantonio, president of the Casino Association of New Jersey (CANJ), highlighted the potential impact on Atlantic City’s gaming and tourism sector:
“A tax increase could negatively affect the operations and workforce of our casino properties, as well as consumer spending in Atlantic City businesses. This could also diminish New Jersey’s standing in online gaming and lead to lost opportunities in jobs and investment.”
National context
Murphy’s proposal is part of a broader trend in the U.S., with other states like Maryland and Ohio also considering significant increases in sports betting tax rates.
Jeremy Kudon, speaking for the Sports Betting Alliance, cautioned against the move:
“This tax increase could be counterproductive for New Jersey. Since launching regulated sports betting, operators have created jobs and generated substantial revenue for the state.”
New Jersey’s gaming history
The Gardening State has been a leader in the U.S. online gambling market, spearheading the effort to legalise sports betting which led to the repeal of the Professional and Amateur Sports Protection Act.
Since 2018, New Jersey has generated over $4 billion in sports betting revenue, making it the third-largest market in the U.S. after New York and Illinois.
Online casino success
The state’s online casino industry has also been successful, generating more than $9 billion in revenue since 2018. This growth has been a model for other states considering gaming expansion.
During the pandemic, online gaming helped stabilise Atlantic City’s casino industry, with monthly online casino revenues in October 2024 surpassing those of land-based casinos for the first time since the pandemic.
Balancing act
As the debate unfolds, New Jersey is at a crossroads. The proposed tax hike aims to capitalise on the industry’s success, but it also risks impacting the competitiveness of online gambling operators.
With neighbouring states like New York and Pennsylvania having higher tax rates, New Jersey’s proposed increase could be seen as an effort to align with regional standards. However, it also poses the risk of eroding the state’s competitive edge in the U.S. online gambling market.
Murphy’s proposal presents a challenge for the industry and lawmakers. Whether the increased taxes will benefit the state or hinder the growth of online gambling remains to be seen. As the June 30 deadline for finalising the FY2026 budget approaches, attention will focus on Trenton, the state capital, where the outcome of this proposal could influence the future of online gambling in New Jersey and beyond.
