New Jersey Senator proposes tax hike for online operators

Finance News

Online gambling continues to rise in New Jersey with $1.9 billion in online wagering in 2023 (a 16% jump from the previous year) and another $1 billion in online sports betting. This revenue keeps the lights on in Atlantic City.

But the state’s tax collection from this bonanza is relatively meager, at least by Jersey standards. While the casinos and their partners cash in lavishly with online gambling, they give only 15% of their profits to the state for online gaming revenue and are taxed 13% on their sports betting revenue. New York, by contrast, slams its online sports books with a 51% tax on their profits.

Sen. John McKeon (D-Essex) has drafted a bill that doubles those online tax rates to 30% — fully aware the casino lobby will move to DEFCON 1. But commensurate tax rates and the potential uses for this additional revenue make it a tempting proposal that deserves a thoughtful discussion.

To wit: McKeon says the tax hike would bring the state at least another $150 million, and he happened to notice that the outrageous fare increase on NJ Transit commuters in Gov. Murphy’s budget is designed to fill NJT’s $106 million budget hole.

“That’s just one way to use it – it could also go to education funding,” McKeon said. “But whatever it might be, these are windfall profits at the end of the day. And raising their tax rate is not going to hurt casinos, no matter how much we’re going to hear that.

“But rather than hitting hard-working people for revenue enhancers, isn’t it our job to ask, ‘Where else should we be looking?’”

Predictably, the Casino Association of New Jersey will oppose it. Some budget hawks, such as Sen. Declan O’Scanlon (R-Monmouth), are incredulous: “Simply saying, ‘This tax is low, it should go up’ — that is anathema to me,” he said.