Sportsbooks Fight New Jersey Increased Tax Proposal

A big shock is looming in the New Jersey gaming industry: Taxes could increase. Governor Phil Murphy proposes increasing the iGaming tax rate from 13% to 25% and the tax for online sports gaming operators from 15% to 25%. 

In the final year of his term, Murphy made these proposals as he tabled a $58.1 billion budget in the New Jersey state legislature a few days ago. As spending increases and revenues decline, New Jersey's governor is looking to eke out millions from the gaming industry that had $1 billion in gross revenues in 2024.

More Taxes

Per the American Gaming Organization (AGO), in 2024, New Jersey ranked third for commercial gaming revenue in the US with $6.3 billion. Only Nevada ($15.6 billion) and Pennsylvania ($6.8 billion) pulled in more gaming revenues last calendar year. That $6.3 billion for New Jersey represents a 9.8% increase year-over-year.

New Jersey collected $154.8 million in taxes from sportsbooks in 2024 alone. If gross revenues stay the same in 2025, nearly doubling the tax rate to 25% would bring in another $95 million.

That's if the increase stops at 25%. Two bills filed in the House (Bill 5349) and in the Senate (Senate Bill 3064) would push the tax rate to 30% on iGaming and online sports wagering. 

Books aren't taking these proposals lying down.

Sportsbooks Are Fighting Back...Sorta

After Murphy's proposal was announced, operators pleaded with customers that "everyone loses" with higher taxes. In a communication to consumers, FanDuel and BetMGM stated that higher taxes would put promotional offers and odds at risk.

Operators are already mobilizing to protest the proposed New Jersey sports betting and iGaming tax rate increases.

The following was sent to @BetMGM customers in NJ. pic.twitter.com/0FlAUjrLFK

— RLinnehanSR (@RLinnehanSR) February 27, 2025

While I'm sure books will pull back on promotional offers, I doubt we'll see worse odds as part of any increased taxation pushback. 

In May 2024, Illinois increased tax rates on operators from a flat 15% to a progressive rate that maxed out at 40%. Yet, when you compare the odds for the Denver Nuggets vs Detroit Pistons, you'll notice they're the same.

New Jersey is such a large market, again bringing in $1 billion in gross revenues last year, that books can't afford to stay away from the market. Their posturing in communicating to consumers is justified; no business wants to see a 15% cut in revenues, but some of the language used isn't true.

And look, a 25 or 30% tax rate would still be the lowest in the area. Neighboring states like New York have a 51% tax rate, Delaware is at 50%, and Pennsylvania is at 36%.

Murphy's budget still needs to be approved by lawmakers in the state. Final approval isn't expected until the end of June, 2025.