New Jersey Considers Raising Online Gaming Taxes Amid Budget Concerns

Currently, operators pay 13% on mobile sports betting revenue and 15% on online casino earnings, but that could soon change as lawmakers explore ways to address a growing budget deficit.

Why New Jersey Is Considering a Tax Hike

One of the primary drivers behind the potential tax increase is the state’s widening budget gap. New Jersey is facing a $2.1 billion structural deficit, which is expected to balloon to $3.8 billion by July unless major spending cuts or revenue-generating measures are implemented.

Additionally, state spending has surged over the past two gubernatorial terms. Under Governor Murphy, annual expenditures have increased by 61%, rising from $34.7 billion to $56.6 billion. To offset these rising costs, policymakers are looking at various revenue sources, and higher gambling taxes are now on the table.

Another factor influencing the discussion is the higher tax rates in neighboring states. New York and Pennsylvania already impose steeper levies on online gaming:

• New York taxes mobile sports betting revenue at 51%—the highest rate in the country.
• Pennsylvania imposes a 36% tax on mobile sports betting revenue and a 54% tax on online slot revenue.

With these examples in mind, some New Jersey officials believe there is room to raise gambling taxes.

Potential Consequences for the Industry and Players

Although a tax hike could generate additional revenue for the state, it may come at a cost for both gambling operators and consumers.

A higher tax burden could force operators to scale back player promotions and bonuses, making the market less attractive for bettors. Additionally, gambling companies could reduce investments in the state, leading to potential job losses and a slowdown in industry growth.

Operators have already warned that increasing taxes could weaken New Jersey’s position as one of the top online gambling markets in the country. If companies see more profitability in other states, they may shift their focus elsewhere, reducing the state’s long-term tax revenue potential.

New Jersey Joins Other States Eyeing Tax Increases

New Jersey is not alone in its push for higher gambling taxes. Several other states have recently signaled their intent to increase tax rates on gambling operators. Maryland and Ohio are among those considering tax hikes in 2025, while Illinois already implemented changes in 2024.

In Maryland, Governor Wes Moore has proposed doubling the sports betting tax from 15% to 30%, arguing that the industry can afford to contribute more to state revenues.

Ohio Governor Mike DeWine is also pushing for a second consecutive tax increase, aiming to raise the sports betting tax rate from 20% to 40%, which would make it the second-highest in the U.S., just behind New York.

Meanwhile, Illinois introduced a progressive tax system in 2024, with the highest-performing operators now paying up to 40% in taxes.