New Jersey unveils online gambling tax bill, lawmakers say state should cut further
New Jersey is one of only seven states that allows the operation of online casino slot machines and interactive table games.
iGaming is big business in the Garden State, with online casino platforms generating a record $1.92 billion in gross gaming revenue (GGR) last year. At least one Trenton lawmaker, Democratic Sen. John McKeon of Essex, believes the state should be entitled to a larger piece of the iGaming market.
In addition to increasing taxes on online gambling, McCann’s bill would increase the state’s share of online revenue generated by gaming companies. McKeon recently introduced Senate Bill 3064. The law is short and simple, consisting of just one sentence.
The bill states that it would "increase taxes on Internet casino gaming and Internet sports betting to 30 percent."
There are 30 iGaming platforms licensed by the New Jersey Division of Gaming Enforcement. There are also 18 licensed online sports betting operators in the state.
All online gaming stores are connected to land-based casinos and share revenue through separate partners.
National Welfare
Last year, Michigan narrowly beat New Jersey to become the richest state in the country for online gambling.
In Michigan, the state allows its three commercial casinos in Detroit to operate online gambling, as well as federally recognized Indian tribes that have Level III gaming treaties with the state. In New Jersey, all online gambling and sports betting operations are operated by commercial licensees.
iGaming is subject to a 15% tax on GGR in New Jersey. Online sports betting revenue is taxed at 13%.
Last year, New Jersey’s share of online gambling profits was approximately $288.5 million. Online oddsmakers split $125.6 million. If McCain had his way, iGaming revenue would have topped $577.1 million last year and online sports betting would have generated more than $289.7 million.
Atlantic City's casino industry, which consists of nine casinos, immediately rejected McCann's bill. The casinos claim they already share a significant portion of online gaming revenue with third-party operators such as DraftKings and FanDuel, and higher taxes will further impact their profits.
Since the rise of online gambling during the 2020 novel coronavirus (COVID-19) pandemic, New Jersey has received more than $888.8 million from iGaming and $362.44 million from online sports betting.
McKeon’s SB 3064 has not yet been assigned to a Senate committee for preliminary consideration.
Taxes are already too high
In 2021, the New Jersey Casino Association, a trade group representing nine Atlantic City resorts, successfully persuaded state lawmakers to remove iGaming and online sports betting from calculations used to determine casino property taxes. Casino officials argue that because these third-party operators have little physical presence in Atlantic City, the casinos do not have to pay property taxes on the online funds.
This tax is not a true property tax but is calculated through the casino’s PILOT (Payment in Lieu of Taxes) program, which was implemented in 2011 as part of Atlantic City’s ongoing state management.
PILOT adjustment continues to face legal challenge from Atlantic County, alleging calculation change violates consent decree requiring county to base 13.5% of PILOT liability on inpatient gaming, iGaming, and retail and online sports betting revenue .
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Source: www.casino.org
