Garden State Governor Phil Murphy wants to raise the tax rate on mobile sports betting and iGaming revenues, but not everyone is on board.
Tax Hikes Looming?
Legislatures nationwide have been toying with the idea of raising the tax rates on sports betting and iGaming revenues for those few states, like New Jersey, that offer the latter. Some states, like Ohio, raised rates only months after mobile sports betting launched.
Moreover, that same governor, Mike DeWine, has proposed doubling the tax rate again during this session from what was initially 10% to 20% and is now proposing a 40% tax on mobile sportsbooks. The latest reports are that DeWine will not get his wish, and tax rates on adjusted gross revenues in the Buckeye State will remain status quo.
New Jersey Governor Phil Murphy, now in his final term due to term limits, is also seeking tax increases in his Summary of Budget Recommendations for FY2026. Currently, mobile sportsbooks pay a 13% tax, while iGaming revenues are taxed at 15%. However, Murphy’s proposed increase would raise those rates to 25% on both verticals. “This proposal is expected to generate an additional $322.6 million for the Casino Revenue Fund. As a result, FY2026 revenues are projected to grow to $989.9 million, up 54.2 percent.
The tax hikes have been in play for more than a year, as State Senator John McKeon had sponsored a bill during last year’s session that would have raised rates on mobile sports betting and iGaming rates to 30%, five percent more than Governor Murphy’s proposal. However, time ran out before that bill could be fully vetted, to which McKeon said afterward, “I’m disappointed that we didn’t get it done in time to be helpful this budget cycle. But there’s no doubt with the forecast for economic times in front of us that, ultimately, we will make some changes to the online gaming tax rate in our state.”
Industry Backlash
There is an old saying: “If it’s not broke, don’t fix it.” That fairly accurately summarizes why some lawmakers are arguing to maintain the status quo. When costs go up, it is the consumers who ultimately foot the bill. In the case of the gaming industry, that manifests in less favorable odds as well as smaller and less frequent bonuses.
If consumers believe that the juice isn’t worth the proverbial squeeze, they will seek other options. This means that many New Jersey bettors could flee to the unregulated and unlicensed offshore market or the emerging prediction market platforms that are gravitating toward the sports market. Should this occur, the smaller player pool will result in smaller handles and ultimately less revenue despite the higher tax rate.
Jeff Ifrah, Co-Founder and General Counsel of iDevelopment and Economic Association (iDEA), a non-profit seeking to grow jobs and expand online interactive entertainment, voiced his concern regarding Murphy’s proposed tax hike. “Competition is growing from unregulated alternatives, including CFTC-approved sports contracts that take bets from 18-year-olds, operate outside state laws, and pay no state taxes. (…) Raising taxes only makes New Jersey’s market less competitive, driving players toward platforms that aren’t regulated and that the state can’t benefit from.”
