Amidst the burgeoning digital gaming industry, New Jersey Senator John McKeon has introduced a new piece of legislation that could significantly alter the financial landscape of online casinos and sports betting platforms operating within the state. The proposed bill seeks to raise the tax on these digital entities to a notable 30%, a substantial hike from the current 15% tax imposed on online casinos and the 13% levied on sports betting platforms. Simple in its language, the bill notably lacks both an implementation date and a detailed rationale behind the push for the increase.
In the Garden State, online casinos and sportsbooks are mandated to collaborate with physical establishments, such as traditional casinos and horse racetracks. These partnerships have resulted in the establishment of 30 online casinos and 18 digital sports betting sites. Generally, operators of these platforms find a tax rate of 10% or under most manageable, which means that the suggested 30% tax could shift New Jersey’s position from being one of the most attractive places for online gaming businesses to one of the least appealing.
Furthermore, with close to 40 US jurisdictions currently legalizing online sports betting, the competitive landscape is diverse. About nine out of these regions maintain a tax rate roughly around 15%, and within this subset, three are governed by their respective state lotteries. Similar tax adjustments have been seen in other states as well, with Ohio Governor Mike DeWine last year leading an initiative that successfully doubled their wagering tax from 10% to 20%.
The subject of online betting taxes is not only a fiscal concern but also a social one. States like North Carolina have seen a rapid embrace of sports wagering, evidenced by the $198.1 million bet by North Carolinians in just the first full week of digital sports betting. Coinciding with the NCAA men’s basketball tournament, this inaugural week saw sportsbooks earn gross wagering revenue of $42.7 million, of which $7.7 million was contributed to the state in tax revenue. This was highlighted during a meeting of the North Carolina Lottery’s sports betting department on March 26.
The issue also entered the spotlight when a Massachusetts Gaming Commission meeting on March 28 pondered limiting wagers after the Wall Street Journal ran an investigative piece examining credit and VIP customer practices in the sports betting industry. Commissioner Eileen O’Brien expressed interest in seeing responses provided by any Massachusetts sports betting platforms to a request for information from US Senator Richard Blumenthal. Senator Blumenthal is currently promoting the GRIT Act which aims to redirect half of the federal excise tax collected from sportsbooks to problem and responsible gambling initiatives.
The ripple effect of the gambling industry’s growth also inspires proactive measures. In Massachusetts, a public-private consortium declared its intention to raise awareness of gambling-related harm among young people, prompted by reports in the Boston Herald. This cooperative effort, launched by Attorney General Andrea Campbell’s office, aims to develop an “evidence-based education, training, and health curriculum” targeting young adults across middle schools, high schools, and colleges.
At the federal level, US Department of the Interior Secretary Deb Haaland on March 25 announced proposed appointments for the National Indian Gaming Commission (NIGC). The choices of Sharon Avery, from Michigan’s Saginaw Chippewa Tribe, and Jeannie Hovland, of South Dakota’s Flandreau Santee Sioux Tribe, underscore the commitment to enhancing tribal economic development and self-sustainability—core mandates of the NIGC. This attention to tribal interests in national gaming policy adds yet another dimension to the ongoing discourse on the industry.
As this legislative proposal unfolds, the implications—ranging from operational costs for gaming platforms to the socioeconomic impacts on the community—will be closely monitored. If the bill passes, New Jersey may witness a significant redefinition of its relationship with the online gambling sector.
