Online sports betting and gaming platforms based in New Jersey may face increased state tax payments.
New Jersey Increases Online Gaming and Sports Betting Taxes
In a move aimed at generating more revenue, New Jersey has announced a significant increase in taxes for online gaming and sports betting. The new tax rate of 19.75% will come into effect from July 1, 2025 [1][3][5].
This new rate is a marked increase from the previous rates of 13% for sports betting and 15% for iGaming. Compared to other jurisdictions, New Jersey's new tax rate is relatively high but still below some states [3].
| State | Tax Rate on Sports Betting Gross Revenue | Notes | |--------------|------------------------------------------|-----------------------------------------------| | New York | 51% | Highest rate in the U.S. | | Illinois | 20-40% + per wager fees | Variable rates with additional fees | | Pennsylvania | 36% | Significantly higher than NJ | | New Jersey | 19.75% | Newly increased rate for both sportsbook & iGaming | | Virginia | 15% | Lower than NJ | | Colorado | 10% | Much lower than NJ | | Arizona | 10% | Much lower than NJ | | Indiana | 9.5% | Lower than NJ | | Michigan | 8.4% | Lower than NJ | | Nevada | 6.7% | Lowest major market rate |
New Jersey's move to 19.75% nearly doubles the rate compared to states like Arizona and Colorado but remains far below New York’s 51% and Pennsylvania’s 36% [3]. The increase aims to balance revenue generation while maintaining a competitive market environment, as per Gov. Murphy's statements [3].
The financial consequences of the tax changes will be spread out across the New Jersey gaming industry, affecting the nine casinos and their third-party operators. Players might see fewer account incentives such as odds boosts, parlay bonuses, and free-to-play contests due to the tax hikes [7].
However, Barry Jonas of Truist Securities believes the new tax rate is manageable and mitigation can be done via promotions reductions [6]. If the higher tax rates had been active in May, New Jersey's iGaming share would have increased from $37 million on 15% to $48.7 million on 19.75%, resulting in a gain of $11.6 million [4].
On sports, the state's cut would have grown from $12.7 million to $20.2 million [2]. Year to date (through May), iGaming GGR totaled more than $1.15 billion, marking a 22.5% gain from 2024 [4].
The final rate for iGaming and online sports betting taxes in New Jersey is expected to be 19.75% [8]. Governor Phil Murphy (D) had proposed a 25% tax on both online sportsbook and iGaming win, but the Democratic leadership in the state Legislature agreed to a tax of less than 20% [6].
New Jersey's iGaming and online sportsbooks have expressed concerns about a potential 25% tax increase, stating it could reduce promotions for consumers and make illegal, offshore online gaming more attractive [8].
Post date: June 24, 2025, 09:50h, Last updated: June 24, 2025, 09:56h.
[1] New Jersey Online Gaming Tax Revenue Hits All-Time High in May [2] New Jersey Sports Betting Revenue Down 10% in May [3] New Jersey Increases Online Gaming and Sports Betting Taxes to 19.75% [4] Impact of Tax Hikes on New Jersey's iGaming and Online Sportsbook Operators [5] Governor Phil Murphy Proposes 25% Tax on Online Sportsbook and iGaming Win [6] Barry Jonas of Truist Securities on New Jersey's Online Gaming and Sports Betting Taxes [7] Players Might See Fewer Account Incentives due to Tax Hikes [8] New Jersey's iGaming and Online Sportsbooks Express Concerns about Tax Increase
- After the update, New Jersey's online gaming and sports betting taxes will be 19.75%, effective from July 1, 2025.
- This new tax rate is significantly higher than the previous rates of 13% for sports betting and 15% for iGaming.
- Notably, the tax rate for online sports betting and iGaming in New Jersey is relatively high compared to some other jurisdictions but lower than states like New York and Pennsylvania.
- The tax rate for sports betting gross revenue in New York, for example, stands at an impressive 51%, making it the highest in the U.S.
- The new tax rate of 19.75% nearly doubles the rate compared to states like Arizona and Colorado.
- The increase in taxes aims to balance revenue generation while maintaining a competitive market environment, as per Gov. Murphy's statements.
- Players might see fewer account incentives such as odds boosts, parlay bonuses, and free-to-play contests due to the tax hikes.
- If the higher tax rates had been active in May, New Jersey's iGaming share would have increased from $37 million on 15% to $48.7 million on 19.75%, resulting in a gain of $11.6 million.
- On sports, the state's cut would have grown from $12.7 million to $20.2 million.
- The concerns expressed by New Jersey's iGaming and online sportsbooks regarding a potential 25% tax increase focus on the potential reductions in promotions for consumers and the increased appeal of illegal, offshore online gaming.
