New Jersey Governor Proposes 25% Tax Hike on Online Gambling

Governor Phil Murphy’s latest budget proposal includes a steep tax hike on online gambling revenue, raising rates to 25%. The state argues that the increase will boost public funds, but industry leaders warn of severe consequences for casinos, consumers, and the local economy.

With Atlantic City’s casinos already struggling to compete, will this tax increase strengthen the state’s economy or push gamblers to unregulated offshore sites?

New Jersey’s Online Gambling Tax Hike: A Boost for Revenue or a Threat to the Industry?

A Tax Hike That Could Change New Jersey’s Gambling Landscape

Key Takeaways:

✅ Tax rates for online gambling would rise to 25%, up from 13% for sports betting and 15% for igaming.
✅ The state expects to generate $402.4 million in additional revenue.
✅ Casino operators warn of potential job losses and reduced investment in Atlantic City.

The Governor’s Proposal: More Revenue, More Controversy

Under the proposed 2026 budget, online gambling operators in New Jersey would face a significant tax hike:

🔹 Online Sports Betting Tax: Rising from 13% to 25%
🔹 iGaming Tax: Increasing from 15% to 25%

Governor Murphy justifies the hike as part of his economic growth strategy, arguing that it will help fund essential programs while ensuring New Jersey remains financially strong.

“Our budget reflects our commitment to building a stronger, fairer, and more prepared New Jersey,” Murphy stated.

The tax increase is expected to generate $402.4 million in additional revenue, with $322.6 million directed to the Casino Revenue Fund and $80 million allocated to the General Fund from sports betting.

Casino Industry’s Backlash: A Threat to Atlantic City?

While the state sees higher tax revenue, the casino industry sees a major threat. The Casino Association of New Jersey (CANJ) strongly opposes the increase, warning that it could cripple Atlantic City’s gaming and tourism industry.

CANJ President Mark Giannantonio argues that the current tax structure allows casinos to reinvest in brick-and-mortar properties, marketing, and promotions that attract visitors. A higher tax rate could:

🔸 Reduce reinvestment in Atlantic City’s casinos—limiting promotions like free hotel stays and gaming credits.
🔸 Weaken competitiveness—making it harder for NJ casinos to compete with those in Pennsylvania and New York.
🔸 Drive players to offshore sites—as heavily taxed operators reduce promotions and offer fewer incentives.

“This tax increase will threaten the stability of Atlantic City’s gaming and tourism industry, as well as the industry’s workforce,” Giannantonio warned.

Will Players Turn to the Offshore Black Market?

One of the biggest concerns is that a higher tax rate could push consumers to unregulated gambling sites, similar to what happened in markets like Sweden and Germany after strict regulations were introduced.

When legal operators lose their ability to offer competitive promotions, players often seek alternative, less regulated options. Offshore sportsbooks and casinos do not pay state taxes or provide the same consumer protections as licensed operators.

This could undermine the very goal of the tax hike—instead of boosting revenue, it might drive money away from the legal market.

What’s Next for New Jersey’s Gambling Industry?

New Jersey lawmakers face a June 30 deadline to finalize the budget. If the proposal passes:

✔ Online gambling operators will need to adjust business strategies to remain profitable.
✔ Casinos may cut back on reinvestment in Atlantic City, reducing employment and tourism benefits.
✔ More players could turn to offshore betting sites, impacting state tax revenue long-term.

The question remains: Will this tax increase help or hurt New Jersey’s gambling market? The coming months will reveal whether lawmakers choose to move forward or reconsider the industry’s concerns.