NJ Gov. proposal to raise online gambling, sports betting taxes faces strong opposition from industry and lawmakers

Governor Phil Murphy’s proposal to increase taxes on online gambling and sports betting is facing mounting opposition from casino operators, online betting companies, and lawmakers from both parties. The proposal, part of the governor’s budget plan, seeks to raise the tax rates on both forms of gambling to 25%, up from the current 13% on online sports betting and 15% on internet gambling.

Murphy’s administration estimates that the tax hike would generate $402.4 million in additional revenue. While this is a small fraction of the $58 billion state budget, it directly targets the two fastest-growing segments of New Jersey’s gambling industry, a sector that generated $138.3 million in tax revenue from online sports betting and $358.3 million from internet gambling in 2023.

The proposal has sparked intense backlash from industry stakeholders, who argue that the tax increase could have serious consequences for the state’s gambling sector, workforce, and future investments.

Bill Pascrell III, a seasoned gambling industry lobbyist representing Atlantic City casinos, the Meadowlands Racetrack in East Rutherford, and Monmouth Park in Oceanport, did not mince words in opposing the tax hike. “This is a terrible idea,” Pascrell said, as per a Press of Atlantic City report. “We are going to run a very strong lobbying and public education campaign against this.”

The Casino Association of New Jersey also came out against the proposal, warning that the tax hike "would threaten the stability of Atlantic City’s gaming and tourism industry, as well as the industry’s workforce."

“These are very challenging times for the Atlantic City casino industry and its employees,” the association stated. “Tourism is down, and visitation has decreased at our brick-and-mortar casinos. This unnecessary tax proposal, against the backdrop of a weakened economic climate, would jeopardize our properties and ultimately hurt the working-class people it supports.”

The Sports Betting Alliance, an industry group that includes FanDuel, DraftKings, BetMGM, and Fanatics Sportsbook, also voiced concerns.

"Increasing taxes on internet casino games and sports betting will jeopardize thousands of jobs and hundreds of millions of dollars in revenue the industries have generated in New Jersey," said Jeremy Kudon, the group’s president. "Any effort to increase sports betting taxes on New Jerseyans threatens all of that progress."

Support for the tax hike within the Democrat-controlled Legislature remains unclear. A similar bill introduced last April by Sen. John McKeon (D-Morris), which sought to raise the tax rate to 30%, has remained untouched in committee. Opposition to Murphy’s plan, however, is already surfacing from key lawmakers on both sides of the aisle.

Sen. John Burzichelli (D-Salem, Gloucester, Cumberland) and Sen. Michael Testa (R-Cape May, Cumberland, Atlantic) issued a joint statement denouncing the proposed tax increase.

“Increasing the tax to 25% is putting a New Jersey success story at significant risk,” they stated. “A tax increase would negatively impact jobs, industry investment, and our New Jersey customers, and it could affect future revenue growth for the state.”

Sen. Vince Polistina (R-Atlantic) argued that rather than imposing higher taxes on the gaming industry, the Legislature should adopt a 5% across-the-board tax cut that Murphy had previously suggested.

“Lower taxes on Atlantic City gaming operations have resulted in significant investment,” Polistina said. “Given the challenges in Atlantic City and with New York gaming on the horizon, I believe the tax rates on all gaming operations should remain the same so that we don’t jeopardize potential investment in the city.”

A report from Jefferies Equity Research predicted that the higher tax rates could cost Flutter, the parent company of FanDuel, $106 million, potentially leading to fewer free bets and less favorable odds for customers. Similarly, Entain, the co-owner of BetMGM, could see a $62 million hit to its revenues.

Pascrell emphasized that the online gambling and sports betting industry has been a major driver of job creation in New Jersey, generating 24,000 new jobs since internet gambling was introduced in 2013 and sports betting followed five years later.