New Jersey passes significant iGaming tax increase and bans sweepstakes
New Jersey has followed the lead of other states by increasing its online casino and mobile sports betting taxes, while also banning sweepstakes gambling.
The tax increase, which sees rates raised to 19%, could hit players, as a similar move in Illinois led to operators DraftKings and FanDuel introducing surcharges to their customers.
Governor Phil Murphy first put forward a proposal to increase tax rates in February. Murphy proposed raising rates to 25%, from their existing levels of 13% for sports betting and 15% for online casinos.
Since then, Bill A5447 has been debated by the Assembly Tourism, Gaming and the Arts Committee as well as the Assembly Appropriations Committee. On June 30, the bill was passed by a vote of 34-5, albeit at a reduced tax rate of 19%.
New Jersey tax revenue benefits
New Jersey’s increase will bring significant additional revenue to the state. Online casino revenue in 2024 totaled $2.39bn. The Garden State could see an additional $100m a year in tax revenue, from online casinos alone.
Murphy’s name is heavily entrenched in online gambling legislation, as he was one of the names on the Professional and Amateur Sports Protection Act (PASPA), which effectively enabled states to offer regulated online betting.
The law was signed after a legal battle lasting nearly a decade between NJ and professional sports leagues.
After tabling the recent proposals, Murphy pointed to the state’s history in forging the online betting market, and said: “We want to further that progress.”
This latest move sees New Jersey joining a host of other states to have imposed similar tax increases in recent months.
In June, Wyoming announced it would double tax rates on sports betting, from 10% to 20%. The Cowboy State previously boasted one of the lowest online gambling tax rates of all states, and the move effectively brought them in line with other regulated markets.
Illinois has also introduced significant tax increases on iGaming operators. As well as rates of up to 40%, casinos and sportsbooks will also be hit with a $0.25 levy on the first 20,000 bets placed every year and a $0.50 fee on every bet thereafter.
The Prairie State now has some of the most aggressive tax rates in the industry, and operators FanDuel and DraftKings announced they would effectively pass these charges on, with both companies charging bettors $0.50 per bet placed – a move that came into force on July 1, 2025.
Both companies are present in the New Jersey market, although there has been no indication they will make similar charges in the state, yet.
New Jersey sweepstakes ban
As well as increasing tax rates, New Jersey has also joined an increasing number of states to have banned sweepstakes casinos, joining the likes of California, which announced a similar move just weeks ago.
Sweepstakes casinos are considered to operate in a gray area of gambling legislation. They do not offer real cash bets; instead, they operate a dual currency system, but critics argue that the system is still effectively the same.
At the beginning of June, Montana became the first state to officially ban sweepstakes betting. New York, Connecticut, Nevada and Louisiana have also imposed similar bans, while other states have indicated a desire to follow.
