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After some back-and-forth, New Jersey state lawmakers have agreed on a new tax rate for online casinos and sports betting.
While it’s an increase, the good news for bettors is they landed on a figure lower than Gov. Phil Murphy’s initial proposal.
The new rate will be 19.75% for both, a step up from the current 15% for online casinos and 13% for online sports betting, but it’s a compromise from the 25% that was on the table.
“We had expected an operator-friendly compromise and think around 20% is manageable,” said Barry Jonas of Truist Securities.
What does this mean for players?
Still, the real question is: How “operator-friendly” is this increase, truly? Are operators genuinely OK with it, or are they just accepting it because it’s less painful than what the governor initially put on the table?
Well, analysts like Jonas suggest they can mostly absorb this extra cost by cutting back on promotions.
So, expect fewer bonus bets, odds boosts, and bonus funds coming your way. It’s their way of avoiding a direct hit to profits — they’ll simply spend less on getting and keeping customers through those big promotional pushes.
“We also think mitigation can be done via promo reductions alone,” Jonas said, “with a 50% mitigation in 2026 very reasonable and potentially higher afterwards.”
Promotions are like rocket fuel for getting new customers and keeping existing ones in this super competitive online gambling world. So, if operators start pulling back on those sweet deals, it’s going to be tougher for them to attract fresh faces or even hold onto the players they already have.
If legal, regulated sites become way less appealing because they’re more expensive or skimpier on the freebies, you might see some players just peace out and head to those unregulated, offshore gambling sites instead. And that’s not good for anyone.
“As evidenced in other jurisdictions, this type of tax hike will not yield such expected tax dollars to the state treasury because it will result in diminishing returns through a consumer shift away from the licensed and regulated providers and back to the unregulated and illegal offshore online businesses from which the state derives no revenue,” said Casino Association of New Jersey President Mark Giannantonio.
That’s not all; a lot of these operators have ties to the community — they partner with local businesses, sports teams, and even media outlets. If their profits take a hit, you can bet they’ll start pulling back on those collaborations.
What are other states working with?
The likes of Jonas are actually saying this new 19.75% rate still keeps New Jersey online casinos competitive on the national scene.
And when you look around, some other states are going wild. Illinois and New York, for instance, just slammed online sports betting with a 51% tax.
For online casinos, New Jersey’s 19.75% rate is higher than before but is nothing like Pennsylvania‘s 54% on online slots (though their table games are much lower at 16%) or Rhode Island‘s 50%.
So New Jersey’s rate is up, but it’s not in the “highway robbery” category when you compare it to some other places, especially for slots that are pure gold for the casinos.
But at the end of the day, players are going to be at the receiving end for whatever increase comes.
