New Jersey Bill Aims to Increase Both Sports Betting, iGaming Tax Rates

• Sen. John F. McKeon (D-27) introduced a bill to increase both the New Jersey iGaming, sports betting tax rates
• Under the legislation, the sports betting and iGaming tax rates both would increase to 30%
• The Garden State currently has a 13% sports betting tax rate and a 15% iGaming tax rate

One New Jersey Senator has introduced legislation to more than double both the state’s sports betting and iGaming tax rates.

Sen. John F. McKeon (D-27) officially introduced S3064 last week, which aims to increase both the state’s sports betting and iGaming tax rates to 30% of gross gaming revenue. The state’s sports betting tax rate is currently at 13% and its iGaming rate is 15%.

If approved, New Jersey would be among the highest taxed states in the country for sports betting and iGaming.

Moving in Line With Its Neighbors

New Jersey has one of the most robust sports betting and iGaming markets in the country, but does not tax the games at a level commensurate with the market. If the legislation is approved, the 30% tax rates for both sports betting and iGaming would bring them close to the level of neighboring New York and Pennsylvania.

New York’s sports betting rate of 51% is the highest rate in the country while Pennsylvania’s rate of 36% is the second highest. Delaware, New Hampshire, and Rhode Island also have rates higher than Pennsylvania, but they have limited markets with only one or two operators.

Pennsylvania currently levies a 54% tax rate on online slots, but table games are only taxed at 16%. If New Jersey’s iGaming rate is increased to 30%, it would put it ahead of Connecticut (18%), Michigan (20%), and West Virginia  (15%).

In 2023, New Jersey brought in $125.57 million in online sports betting tax revenue at a 13% tax rate. If the rate had been 30%, the state would have taken in $289.8 million in tax revenue for the year. For iGaming, the Garden State reported $288.48 million in tax revenues at a 15% rate. At a 30% rate, New Jersey would have taken in nearly $577 million in iGaming revenues for the year.

Is Ohio the Blueprint?

The most recent state to increase its sports betting tax rate was Ohio in July 2023. Buckeye State lawmakers doubled the sports betting tax rate from 10% to 20% last June, which went into effect a month later in July, just six months after launching sports betting in January 2023.

Gov. Mike DeWine (D) suggested doubling the tax rate in February 2023, just one month after launch. In April, the Ohio House of Representatives approved their own version of the state’s budget that did not include the increase. The Senate amended the House version of the budget and included the tax rate hike.

In the end, the House and Senate agreed to the new state fiscal year 2024-2025 budget in June, which included the increase of the Ohio sports betting tax rate from 10% to 20%.

Through its first five months, Ohio generated more than $507.08 million in taxable revenue, which translated to more than $50.7 million in tax revenue at its 10% sports betting tax rate. At a 20% tax rate, that figure would have doubled to $101.4 million in taxes for Ohio.