New Jersey is contemplating raising the state’s online casino gaming and sports wagering tax rate to a maximum of 30%. Additionally, Senator John McKeon is cited as the lead sponsor of the tax rate hike legislation, named Bill S3064. But, there is no summary of NJ casino gaming and sports wagering bill.
There is a possibility that legislation hasn’t yet gone for drafting to the Office of Legislative Services (OLS). In this regard, LSR asked McKeon to provide a comment on March 26, but he didn’t offer a response.
Details of the current NJ sports wagering tax rate:
The present tax rate for online sports wagering in the Garden State is 14.25%. However, the states with the 2 biggest tax rates in the US are Pennsylvania (36%) and New York (51%).
Since online sports wagering debuted in NY during January 2002, it has provided significantly more tax income compared to what NJ did during February of this year.
The statistics are as follows:
NJ sports wagering
- 14.1% successful tax rate in that period
- $286.7 million in tax revenue
- $26.1 billion in handle
NY sports wagering
- 50.8% successful tax rate in that period
- $1.73 billion in tax revenue
- $39.2 billion in handle
Had NJ collected a 30% tax throughout that period, its overall income would have been $609.7m.
Online casino tax details:
As for the details of online casino taxes, let’s go back to 2013 when the Garden State first started online casino operations, with an overall of $1.36bln in taxes accumulated at a succesful rate of 17.4%. If we apply the said 30% tax retrospectively, NJ theoretically failed to generate $980m in extra income during that period.
As for Pennsylvania, which taxes online casino income at the nation’s biggest commercial rate, it has generated more from online casinos since its own debut in 2019, at $2.18bln, than NJ did in 2013.
Regarding NY in particular, tries to first reduce the tax rate in the state by raising the number of operators didn’t bear fruit. In this regard, during the first month of last year, Jason Robins, the CEO of DraftKings, proposed to the regulators of the said state that without a tax rate cut, the operator may be “forced” to provide poor odds in NY sports wagering.
Illinois also wants a tax increase:
JB Pritzker, the governor of Illinois, suggested increasing the tax rate on sports wagering from 15% to 35% in his FY 2025 executive budget. However, in Ohio, Gov. Mike DeWine has introduced law that raises the tax rate on sports wagering from 10% to 20% for the FY 2024/25.
In the meantime, Kansas and Michigan have succesful tax rates under 6% because of their quota for promotional subtractions. The identical framework in PA has successfully decreased its statutory rate from 36% to approximately 24%, according to the Legal Sports Report (LSR).
Casinos in Atlantic City make some income from online casinos in NJ. However, this is very small compared to what they gain from in-person gamblers, but it is still important.
This means that if the aforementioned bill passes, their profit would be significantly smaller. And that is why there is a possibility that they would represent significant opposition to the bill, according to PlayUSA.