State Senator John McKeon is sponsoring a bill that would increase tax rates on both iGaming and sportsbook revenues in the Garden State to 30%, which would be comparable to neighboring states.
Paying a Fair Share
Online casino gaming and mobile sports betting have been wildly successful in the Garden State and one legislator believes the state deserves a bigger piece of the revenue pie than what it has been getting. Senator John McKeon believes that the tax is too low based on neighboring states, whose taxes are much higher.
Senator McKeon stated the current tax structure is “just not commensurate with where everybody else is, and we can use the revenues.”
“This is pure profit, the majority of which is deriving from online betting, sports betting in particular,” said McKeon.
Currently, online casino operators are charged 15% on adjusted gross revenues with an additional 2.5% earmarked for the Casino Reinvestment Development Authority which yields an effective total tax rate of 17.5%. Meanwhile, mobile sportsbook operators in New Jersey pay the state 13% on revenues plus an additional 1.25% for an effective tax rate of 14.25%.
Senator McKeon’s bill, S3064, would change those rates to 30% for both iGaming and mobile sportsbook revenues in the Garden State. The revenues produced to this point have seen $1.36 billion in taxes from online casino gambling since its inception in 2013 and over $438 million generated in taxes from sportsbooks since its launch in 2018. Neither figure includes the additional 2.5% and 1.25%, respectively.
But Wait, There’s More
Neighboring New York imposes the highest tax on sports betting operators in the nation at 51% of adjusted gross revenues while its proposed tax on iGaming is reported to be 30.5% if and when it gets approved in the legislature.
Pennsylvania levies a 36% tax on mobile sports betting operator’s adjusted gross revenues. Online table game revenue is taxed at 16% while online slots are levied at 54% of revenues.
Therefore, it’s not surprising that New Jersey wants a bigger cut of the profits, but there will undoubtedly be pushback from the casino operators and their lobbyists.
“I was, in part, looking as to areas that wouldn’t take money out of the pocket of hard-working New Jerseyans, but out of an industry that, this year alone, on online gaming has profited $1 billion,” McKeon said.
Betting on College Teams
In addition to the proposed tax hikes, McKeon would like to remove the ban on in-state college sports betting, or betting on any collegiate event that takes place in New Jersey. The state’s revenue derived from those games would be dedicated to its public universities.
Another facet of McKeon’s bill would be to ban points-betting apps that allow New Jersey residents under 21 to place non-monetary wagers. The sites mirror real money sites and Senator McKeon believes they are used as lures to get underage people familiar with them and more prone to gamble.
“You go online and it doesn’t say DraftKings, but it’s affiliated with them,” the senator said. “And it exactly mimics that site, so if you’re 15, 14, 12, or 18 … you can go on these sites and replicate exactly what you would do if you were betting real money.”
