In a major development that could impact New Jersey’s burgeoning online gambling and sports betting markets, Senate Bill 3064 was introduced on April 8, following its filing the previous week. The bill has been referred to the Senate State Government, Wagering, Tourism & Historic Preservation Committee for consideration. The proposed legislation aims to amend existing state laws by raising the tax rate applied to online gambling revenues from the current 15% to 30%, and sports betting from 13%.
Should the bill be enacted, it would bring substantial changes to Section 17 of P.L.2013, c.27 (C.5:12-95.19), which currently sets the online gambling tax, and Section 7 of P.L.2018, c.33 (C.5:12A-16), which delineates the tax framework for sports wagering. The law, if passed, is slated to take effect on the next January 1 following its enactment.
As it stands, New Jersey laws mandate online casino and sportsbook operations to be affiliated with physical establishments, such as casinos and racetracks. This has given rise to a thriving digital gambling landscape, with 30 online casinos and 18 sportsbooks active in the Garden State.
Taxation levels are a significant factor influencing the sports betting industry’s overall health. Industry operators generally advocate for a tax level of 10% or below; the 30% rate proposed by Senate Bill 3064 would catapult New Jersey from one of the most advantageous jurisdictions for such businesses to one of the least attractive in terms of taxation.
Comparative to nearly 40 U.S. jurisdictions that have legalized online sports betting, only nine states boast a tax rate near the 15% mark. Among these, three states operate under the regulatory authority of their state lotteries. Just last year, Ohio Governor Mike DeWine led an initiative that successfully doubled the state’s betting tax rate from 10% to 20%.
Furthermore, New Jersey’s gambling industry has come under intense scrutiny throughout 2024. January saw Senator Joseph Pennacchio reintroduce legislation aimed at introducing slots at racetracks and clamping down on advertisement. Despite multiple efforts and reintroductions dating back to 2014, these proposals have failed to progress beyond committee discussions in 2020 and 2022.
Amid these controversies, research commissioned by the Campaign for Fairer Gambling and conducted by National Economic Research Associates concluded that New Jersey’s growing online gambling market may be financially detrimental to the state’s economy. The study argued that the negative impacts of gambling harm largely offset the positive fiscal contributions made by the sector through tax revenues.
Contrary to the findings of this study, the actual numbers tell a different story, with New Jersey’s gambling revenues hitting a record $5.78 billion in 2023. January 2024 continued this trend with an impressive $559.1 million in revenue, marking a 28.0% increase year-on-year.
However, not all news has been positive for the state’s gambling industry. In February, the New Jersey Division of Gaming Enforcement (NJDGE) announced that it would no longer pursue legal action against Evolution, which originated from allegations back in 2021. After an in-depth investigation, the NJDGE decided not to pursue claims of Evolution offering products in countries under U.S. trade sanctions. Evolution has consistently contended that these allegations were the result of an unidentified third-party report.
Last month marked another significant change when David Rebuck stepped down from his position as director of the NJDGE. In his departing remarks, Rebuck expressed pride in New Jersey’s online gambling regulatory framework, asserting that it should be viewed as the “platinum standard” of the industry.
In light of these developments, all eyes are now on Senate Bill 3064 and its implications for the digital gambling sphere in New Jersey. The state’s lawmakers, gambling operators, and stakeholders are keenly awaiting further progress on the bill, which could redefine the online gambling landscape both within the state and potentially beyond its borders.
