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New Jersey Governor Phil Murphy has proposed increasing taxes on iGaming and online sports betting as part of his $58.1 billion budget plan for 2026. The move aims to generate additional revenue for the state by tapping into the success of online gambling.
Aiming for a Higher Tax Rate
New Jersey has long been a gambling-friendly state, offering lower tax rates than many others. Currently, the state taxes iGaming revenue at 15% and online sports betting revenue at 13%. Gov. Murphy’s proposal seeks to raise this to 25%, significantly increasing the state’s share of gambling profits.
The plan also includes potential tax hikes on recreational cannabis, tobacco, alcohol, and property sales. If approved, the online gambling tax increase alone could bring in an estimated $402.4 million in additional revenue for 2026.
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Other States Have Made Similar Moves
New Jersey is not the only state considering higher gambling taxes. New York already imposes a 51% tax on sports betting revenue, while Pennsylvania taxes iGaming at 54% and online sports betting at 36%.
Similarly, Ohio recently debated another tax increase on sports betting after doubling its rate to 20% in 2023. If implemented, the new proposal would push the tax rate to 40%.
Industry Concerns Over Economic Impact
While the proposed tax hike could bring in substantial revenue, industry stakeholders have raised concerns about its potential consequences. The Casino Association of New Jersey warned that Atlantic City’s casinos rely heavily on partnerships with online gaming operators to attract customers and drive business.
Higher taxes could disrupt these relationships, affecting promotional efforts and reducing overall revenue for the gambling sector. The proposal comes at a time when New Jersey’s gambling industry reported a slight revenue decline in January, primarily due to slower sports betting activity.
If the tax increase is approved, it could reshape the state’s online gambling landscape, with operators reassessing their business strategies in response to the new financial burden.
