State Sen. John McKeon wants New Jersey online casino and sportsbook operators to pay higher taxes. The first-term senator has pre-filed a bill that would hike New Jersey online gambling taxes to 30%, nearly double existing tax rates. However, New Jersey’s retail casino lobby has said it opposes any online tax hike.
Because Bill S3064 is still in its early stages, it still needs to be assigned to a committee and the New Jersey Office of Legislative Services (NJOLS) must still evaluate the bill’s text. As a result, details are sparse, with only bare-bones information on the Senate website.
There it says only that the bill:
Increases tax on Internet casino gaming and Internet sports wagering to 30 percent.
Before joining the Senate this year, McKeon served 21 years in the New Jersey General Assembly. He is vice chair of the Senate’s State Government, Wagering, Tourism, & Historic Preservation Committee. McKeon did not immediately respond to Bonus’ request for comment.
Rate Hike Would Significantly Boost Tax Revenues
Currently, New Jersey taxes online casino revenue at 15%, although an additional 2.5% goes to the Casino Reinvestment Development Authority (CRDA). Similarly, the state taxes online sports betting at 13% plus a further 1.25%, bringing the totals for online casinos and sportsbooks to 17.50% and 14.25%, respectively.
Notably, in the 10-plus years since New Jersey launched online casinos, the state has pocketed over $1.36 billion in gaming taxes. Additionally, the nearly six years since online sports betting became legal added over $438 million in additional revenue for the state.
The proposed 30% would significantly increase tax revenue available to fund state programs. Legal Sports Report (LSR) reported that if the higher rate had been in place from the get-go, New Jersey could have collected nearly $1.6 billion more since 2013. Almost a billion of that would be from New Jersey online casinos alone.
However, the bill has to pass before New Jersey starts counting its new chickens. And it’s likely to face stiff opposition from the brick-and-mortar casino industry.
Atlantic City Casinos Oppose Any Tax Increase
While McKeon’s bill would bring New Jersey’s online gambling tax rate in line with rates in nearby states, Atlantic City casinos could rebuke the proposed change.
As PlayUSA noted, although Atlantic City casinos reap some reward from online casino activity, that revenue is a pittance when compared to in-person revenue. If a higher online gaming tax rate means overall revenues drop, those casino interests could come out hard against the proposed change. (PlayUSA, LSR, and Bonus are owned by Catena Media.)
Mark Giannantonio, president of the Casino Association of New Jersey (CANJ), has already said the group “strongly opposes any proposed tax increase for online gaming.”
If Atlantic City’s powerful brick-and-mortar casino lobby decides to move against BS3064, its existence may be short. Even so, McKeon’s bill will have started a conversation around New Jersey’s gaming tax rates that is unlikely to end soon.
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