New Jersey Implements Major Online Gambling Tax Increase

New Jersey’s Governor Phil Murphy signed a new law that raises the tax rate on online gambling to 19.75%. The new tax rate affects all forms of online gambling, including casino games, sports betting, and daily fantasy sports.

Previously, the tax rates were 13% for online sports betting and 15% for casino games. Now, everything is taxed at the same higher rate. While the increase is aimed at bringing in more revenue for the state government, it could change the experience for people who gamble online.

Be It Casinos or Sportsbooks, Everything is Affected

The tax increase passed through both parts of New Jersey’s government, but it wasn’t an easy process. It went through a tough vote in both houses. The Assembly voted 45-33 to approve it, while the Senate passed it with a 25-14 vote. Most Democrats voted for the increase, while most Republicans voted against it.

New Jersey lawmakers pass Bill A5803 increasing tax rates on online gambling revenue. Gaming revenue in the state increases in May. #NewJersey #OnlineGambling #TaxRates #GamingRevenuehttps://t.co/PVfiwAJPDd pic.twitter.com/jTjS8OvnMQ

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As part of the same legislation, New Jersey also banned sweepstakes casinos completely. These were online games that used a different system to avoid gambling laws, but the state decided they were too similar to real gambling and shut them down entirely. The ban was passed with strong support in both the Senate (34-5) and Assembly (69-10-1).

New Jersey has raised tax rates on online casinos, sports betting, and daily fantasy sports as part of the new state budget.
These changes reflect a shift toward increased gaming revenue, aligning with broader state tax updates.
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Revenue Impact and Government Projections

Governor Murphy first wanted to raise the tax rate to 25%, which would have brought in about $402 million in extra money for the state. The compromise rate of 19.75% will bring in less, but still a significant amount.

If you thought Murphy’s suggestion is high, wait until you hear of the bill introduced by the State Sen. John McKeon (D-Essex/Passaic) in March 2025. The bill wanted to increase the tax rates to 30% (double the previous one), something that operators like BetMGM and FanDuel were strongly opposed to.

That didn’t deter the governor from signing the new law as he saw it as a key aspect in the budget for the 2026 financial year.

The Targeted Revenue Increase

The projected revenue increase from the tax hike is as below:

Is It The Same in Other States?

New Jersey isn’t the only state raising taxes on online gambling. Many others are looking at gambling as a way to bring in more money.

From the table above, it’s clear that New Jersey’s rates are quite reasonable compared to some states. Pennsylvania taxes online slot games at 54%, which is much higher than New Jersey’s 19.75%. New York has the highest sports betting tax at 51%, while Nevada keeps it low at 6.75%.

Illinois has taken a different approach by taxing each bet placed rather than taking a percentage of profits. They charge $0.25 for each of the first 20 million bets a company takes and then $0.50 for each bet after that.

This shows a clear trend of states asking gambling companies to pay more as the market grows. As more people bet online, states are making sure they get a bigger share of the money.

Sources

• Office of the Governor | Governor Murphy Signs Fiscal Year 2026 Budget into Law
• NJ Governor Signs Bill Hiking Tax For Online Sports Betting – Law360
• New York Takes A Gamble With 51% Tax On Online Sports Betting
• New Illinois laws, taxes starting July 1 include single use plastic restrictions, tipped minimum wage increase, vape tax – CBS Chicago
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