DraftKings, FanDuel to Bear Brunt of New Jersey Online Betting Tax Hikes

Posted on: March 5, 2025, 11:55h. 

Last updated on: March 5, 2025, 12:19h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Two largest operators would see taxes in the state increase by an estimated $126 million
  • New Jersey hasn’t officially approved governor’s plan to boost iGaming, sports wagering taxes

DraftKings and FanDuel, the two largest online sportsbook operators in the US, would bear the brunt of increases should New Jersey approve proposed iGaming and sports betting tax hikes.

New Jersey online gaming sports betting
New Jersey Gov. Phil Murphy (D) at a recent press event. DraftKings and FanDuel would see significant increases if the state raises internet gaming taxes. (Image: NJ Governor’s Office)

In a new report, Eilers & Krejcik Gaming (EKG) estimated that those two companies would see their tax tabs increase by a combined $126 million this year should the Garden State proceed with boosting internet wagering levies. Last month, Gov. Phil Murphy (D) proposed increasing the state’s tax on iGaming revenue from 15% to 25% while nearly doubling its levy on online sports betting to 25% from 13%. Those ideas have not been signed into law, but if that happens, DraftKings and FanDuel would experience the largest increases.

New Jersey OSB taxes
A chart of New Jersey’s online gaming taxes and how those rates could change if increases are approved. (Image: Eilers & Krejcik Gaming)

Based on New Jersey’s current online gaming tax rates, DraftKings and FanDuel would pay an estimated $180.7 million and $186.1 million, respectively, this year. But if the state approves the tax hikes, those figures would jump to $242.2 million and $250.5 million, respectively, according to EKG.

Some Wiggle Room on New Jersey Tax Increases

New Jersey politicians have proposed Assembly Bill 5349 and Senate Bill 5349 — legislation that would advance Murphy’s gaming tax agenda. However, passage isn’t set in stone and compromises are possible.

New Jersey’s track record of nuanced and broadly industry-friendly policy choices leads us to believe there is scope to lower the online sports betting rate, possibly closer to the national average of 20%,” observes EKG.

Predictably, operators aren’t enthusiastic about Murphy’s plan. BetMGM and FanDuel have asked customers to contact their state representatives to vocalize concern about the tax gambit, but the governor’s proposal is modest in comparison to what’s been seen in other states.

“We still think some kind of tax increase is likely given the proposal is (1) fairly moderate (~27% blended GGR rate), (2) backed by Governor Murphy, (3) slated for inclusion in the budget, a must-pass bill, and (4) made amidst exigent fiscal need (the state is facing a $3.8 billion budget deficit),” notes EKG.

Other Candidates for 2025 Sports Betting Tax Increases

New Jersey has long been viewed as a logical candidate to increase internet wagering taxes so Murphy’s proposal isn’t surprising to industry observers. The aforementioned budget deficit only exacerbates the need for the state to tap new revenue sources.

Beyond New Jersey, it’s possible other states, including another in the Mid-Atlantic region, will boost online sports wagering taxes. Maryland is widely considered a leading contender to do so. Gov. Wes Moore’s (D) 2025 budget proposes boosting the state’s levy on mobile sports betting to 30% from 15%.

Unlike New Jersey, Maryland doesn’t permit iGaming so a tax on that activity isn’t in the cards, but Moore’s budget also calls for increasing the tax on table game winnings at the state’s land-based casinos to 25% from 20%.