New Jersey Online Sportsbooks, iGaming Platforms Likely to Pay Higher State Tax
Posted on: June 24, 2025, 09:50h.
Last updated on: June 24, 2025, 09:56h.
- New Jersey is expected to increase certain gaming taxes
- The tax hikes will impact iGaming and online sportsbook operators
- New Jersey’s online gaming taxes will remain competitive
New Jersey online sportsbooks and iGaming platforms are expected to see their tax rates hiked as the two mobile gaming sectors continue to prosper.
In February, New Jersey Gov. Phil Murphy (D) floated the idea of the state taking a bigger cut of gross revenue retained by online oddsmakers and internet casino websites and mobile apps.
The Democrat, who will be succeeded in January 2026 following the end of his second and final full-year term, initially called for a 25% tax on both online sportsbook and iGaming win, or the money kept by the operators after paying out winning wagers. Currently, gross gaming revenue (GGR) from online sports betting is taxed at 13% and iGaming GGR is taxed at 15%.
NJ.com reports that Murphy and the Democratic leadership in the state Legislature, which controls both legislative chambers, have struck a compromise in agreeing to a tax of less than 20% on both online sports wagering and iGaming. The reported deal comes a week before the governor and Legislature must finalize a new state budget.
Satisfying Government, Operators
New Jersey’s many iGaming and online sportsbooks fired back at Murphy’s original proposal to raise their taxes to 25%. They said such a hike would reduce promotions for consumers and possibly make the illegal, offshore online gaming market more attractive with better odds.
Barry Jonas of Truist Securities believes the final rate will be 19.75% on iGaming and online sports betting.
We had expected an operator-friendly compromise and think ~20% is manageable,” Jonas wrote in a note on the tax developments and how it might impact the sports gambling and iGaming businesses. “We also think mitigation can be done via promo reductions alone, with a 50% mitigation in 2026 very reasonable and potentially higher afterwards.”
Jonas’ comments suggest players won’t see slightly worse odds, bet minimums, or surcharges as a result of the tax hikes, but instead, might field a bit fewer account incentives such as odds boosts, parlay bonuses, and free-to-play contests.
Compared to some other online sports betting and/or iGaming jurisdictions, New Jersey’s 19.75% tax would remain competitive. In Illinois, lawmakers recently jacked up the online sports betting tax to 51%, which prompted DraftKings and FanDuel to initiate a 50-cent per-bet surcharge beginning September 1. New York taxes online sports betting revenue at 51%. Pennsylvania takes 36%.
May Record
New Jersey’s online gaming tax increases come at an opportune time for the state, as GGR from internet slots and table games has reached all-time highs. May marked a state record for iGaming with revenue of more than $246.8 million.
Year to date (through May), iGaming GGR totaled more than $1.15 billion — a 22.5% gain from 2024 — or a difference of almost $212.5 million. However, online sports betting revenue was down 10%, or $52.8 million, to $460.1 million.
If the higher tax rates had been active last month, New Jersey’s iGaming share would have ballooned from $37 million on 15% to $48.7 million on 19.75% — a gain of $11.6 million. On sports, the state’s cut would have grown from $12.7 million to $20.2 million.
While the tax changes will impact the nine casinos, since much of the iGaming and online sports revenue is shared with their third-party operators, the financial consequences will be spread out across the New Jersey gaming industry.
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