New Jersey Raises Online Gambling Tax to 19.75%
New Jersey’s legislature passed Bill A5803, a measure hiking the tax rate on online gambling, including internet casinos, sports betting, and daily fantasy sports (DFS), to a uniform 19.75% of gross gaming revenue (GGR).
A Unified Tax Rate with Big Implications
Bill A5803 establishes a standardized 19.75% tax rate across all online gambling sectors, replacing the previous patchwork: 15% for iGaming, 13% for mobile sports betting, and 10.5% for DFS.
For online casinos and sportsbooks, the increase is notable but manageable (4.75% and 6.75% jumps, respectively). For DFS operators like Underdog Fantasy and PrizePicks, however, the leap from 10.5% to 19.75% nearly doubles their tax burden, a change that “flew under the legislative radar,” per industry insiders.
Governor Murphy initially pushed for a 25% rate, but resistance from major operators like DraftKings, FanDuel, and BetMGM led to the compromise rate, aligning New Jersey with Maryland’s 20% and Louisiana’s 21.5% sports betting taxes.
Industry Concerns and Consumer Ripple Effects
The 19.75% rate hits DFS operators hardest, threatening their razor-thin margins in a niche segment of the $7 billion New Jersey gaming market. DFS, which includes platforms like DraftKings’ Daily Fantasy Sports and Underdog’s pick’em contests, contributes only a fraction of the state’s gaming revenue, roughly $50 million in 2024. The near-100% tax increase could force operators to pass costs to players.
Larger operators, while better equipped to absorb the increase, are also wary. The Sports Betting Alliance, representing DraftKings and BetMGM, supported the tax hike as a way to strengthen regulated markets but cautioned that higher costs could drive casual bettors to unregulated offshore platforms, which lack age verification and responsible gaming safeguards.
A National Trend in Tax Increases
New Jersey’s move is part of a broader wave of states hiking gambling taxes to capitalize on the industry’s growth. Maryland, under Governor Wes Moore, raised its sports betting tax to 20% from 15%, scaling back from a proposed 32%. Louisiana’s Governor Jeff Landry approved a 21.5% rate effective August 1, 2025, up from 15%. Illinois took a more aggressive approach, combining a 40% revenue tax with per-bet fees starting at $0.25 for the first 20 million wagers, rising to $0.50 thereafter, effective July 1, 2025.
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