New Jersey Bans Sweepstakes Casinos and Hike Gambling Taxes

New Jersey’s lawmakers have taken bold action to reshape online gambling and eliminate sweepstakes casinos.

Two impactful bills—one banning sweepstakes models and the other raising gambling taxes—are now on Governor Murphy’s desk.

If signed, the laws will solidify New Jersey’s stance on regulatory enforcement while generating more state revenue from iGaming.

Operators must adapt quickly as New Jersey joins a growing list of states cracking down on grey-market sweepstakes models.

New Jersey Poised to Ban Sweepstakes Casinos and Raise iGaming Taxes in Regulatory Overhaul

Key Points

• Bill A5447 bans sweepstakes casinos, targeting virtual currency models that bypass traditional gambling licenses.
• Bill A5803 raises the online gambling tax rate to 19.75%, impacting online casinos, sportsbooks, and fantasy sports.
• Governor Murphy’s approval is the final step, with both measures expected to become law in early July 2025.

New Jersey Advances Landmark Gambling Bills to Ban Sweepstakes Casinos and Raise Online Tax Rates

On June 30, 2025, New Jersey’s legislature passed two major bills that could reshape the state’s gambling ecosystem. The first, Bill A5447, prohibits sweepstakes-based casino models from operating within the state. The second, Bill A5803, increases the tax rate on online gross gaming revenue (GGR) from 15% to 19.75%, affecting all forms of iGaming, including sports betting, online casinos, and daily fantasy sports.

Both bills now await final approval from Governor Phil Murphy, who is expected to sign them into law as part of the 2025–2026 state budget process.

Sweepstakes Ban Targets Legal Loopholes

Bill A5447, which passed the Senate by a 34–5 vote after earlier clearing the Assembly 69–10, takes direct aim at sweepstakes casinos—an increasingly controversial business model that simulates casino games but avoids gambling classifications by tying gameplay to virtual currencies or promotional entries.

This so-called “sweepstakes model of wagering” has operated in legal gray areas across the U.S., often without the oversight of traditional gaming regulators. The bill empowers the Division of Consumer Affairs and Enforcement to investigate and penalize illegal operators, providing new regulatory teeth to shut down unauthorized platforms.

New Jersey joins a growing list of states—Connecticut, Nevada, Montana, and New York—that are moving to curtail or ban these models. Notably, Louisiana passed similar legislation, but Governor Jeff Landry vetoed it, citing existing regulatory powers.

Industry Pushback and Broader Implications

The proposed ban has drawn strong criticism from the Social and Promotional Games Association (SPGA), which represents sweepstakes operators. In a public statement, the group urged Governor Murphy to veto the bill, claiming it unfairly targets an innovative, emerging industry while protecting entrenched casino interests.

The SPGA also warned that the broad language in A5447 could unintentionally impact promotional platforms used by major companies like Microsoft and Marriott, which sometimes employ sweepstakes-like mechanics in loyalty and marketing campaigns.

They called the bill a “misguided attempt to regulate through fear rather than fact,” warning it could damage New Jersey’s reputation as a technology and entertainment hub.

Gambling Tax Rate Increased to 19.75%

In a move aimed at generating more revenue for the state, lawmakers also passed Bill A5803, increasing the tax rate on GGR from online casinos, sports betting, and daily fantasy platforms to 19.75%. The measure passed the Assembly 45–33 and the Senate 25–14.

Governor Murphy had initially proposed a 25% tax rate, but lawmakers settled on a compromise following negotiations with industry stakeholders. This new rate brings New Jersey more in line with other markets, such as Pennsylvania (36%) and New York (51% on mobile sports betting), although it remains significantly lower.

The change is seen as a fiscal tool to balance the budget while preserving competitiveness in the increasingly saturated U.S. iGaming space.

What This Means for Operators

If both bills are signed into law, operators will face a two-fold challenge:

1. Eliminating sweepstakes-based products or exiting the New Jersey market entirely if they operate under this model.
2. Adjusting to tighter margins due to increased tax obligations, which may affect promotional budgets, player retention strategies, and affiliate payouts.

Compliance teams and legal departments must urgently review product offerings to ensure they do not fall within the newly outlawed sweepstakes definition.

New Jersey’s dual legislative push to ban sweepstakes casinos and raise iGaming taxes reflects a broader national trend of tightening oversight on gambling innovation. While the moves aim to protect consumers and enhance state revenues, they also signal a less tolerant stance on regulatory gray areas.

Governor Murphy’s expected approval will place New Jersey at the forefront of a growing movement to close legal loopholes and redefine the future of digital gambling in the U.S. Operators must now prepare for rapid change—compliance is no longer optional, and agility will be the key to survival.

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