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New Jersey Lawmakers Debate Tax Hike on iGaming and Sports Betting
While Governor Phil Murphy introduced a proposed budget way back in February that included an increase in sports betting and online gaming tax rates to 25%, a source within the industry says that legislators don't support this increase. New Jersey is still debating whether to go ahead with the proposed increases - but it is likely that either one or the other will gain approval, but not both. As the June 30 deadline to finalize New Jersey's 2026 fiscal year budget looms, lawmakers in Trenton are still wrestling with Governor Phil Murphy's controversial proposal to increase tax rates on sports betting and iGaming to 25%. While the idea promises a significant revenue boost, it faces resistance from legislative leaders and the gaming industry alike. Governor Murphy, delivering his final budget in February, laid out a record-setting $58.05 billion spending plan. Among the highlights was a proposal to raise the state's iGaming and sports betting tax rates - currently 15% and 13%, respectively - to a unified 25% rate on adjusted revenues. If enacted, the move could generate an estimated $402.4 million in additional revenue for the 2026 fiscal year. However, according to a source with direct knowledge of discussions in both the Senate and Assembly, support for such a sharp increase is lacking. There's almost no appetite to go all the way to 25%, but there is enough interest where some form of increase - at least in iGaming - is likely, the source stated. Primary election results may shape tax outcomes Recent primary elections in New Jersey are expected to influence the direction budget negotiations will take. Democratic Representative Mikie Sherrill emerged victorious from a crowded primary field, while Republican Jack Ciattarelli, a seasoned candidate and former Assemblyman, won the GOP nomination. Had Sherrill lost, sources suggest the probability of a Republican governor in the next election cycle could have exceeded 50%, which would have likely resulted in shelving any tax increases on the gaming sector. With Sherrill's victory, however, Democratic momentum remains strong, and lawmakers are more inclined to consider moderate tax adjustments. The industry source outlined two likely outcomes currently being discussed: increasing both sports betting and iGaming tax rates to 18%, or leaving the sports betting rate untouched while bumping iGaming up to 20%. Governor Murphy has stated he will defer to the will of both chambers on the final rate decisions. New Jersey among several states eyeing tax adjustments in 2025 New Jersey is not alone in its effort to rework gaming tax structures in 2025. Several other states have made similar moves this year, though none have enacted increases as steep as the 25% proposed in the Garden State. In Maryland, Governor Wes Moore signed legislation raising the sports betting tax rate from 15% to 20%. The final number came after Moore initially proposed a 32% rate, but compromise prevailed in the legislature. The tax hike contributes to Maryland's $67.3 billion budget, which also includes $2.3 billion in spending cuts and over $1 billion in new revenue. Louisiana also passed legislation to raise its online sports betting tax rate. The original proposal by Representative Neil Riser aimed for a 31% rate, but after pushback from operators, lawmakers settled on 21.5%. The bill passed the Senate with overwhelming bipartisan support. Meanwhile, Illinois has taken a different approach, opting to implement a per-bet fee rather than adjusting percentage-based taxes. The state will now charge a $0.25 fee on the first 20 million online bets per operator annually, increasing to $0.50 per bet thereafter. The fee is expected to generate $36 million annually but could lead to effective tax rates of up to 60% for high-volume operators like FanDuel and DraftKings. This new structure is layered on top of a progressive tax model enacted last year, which already requires rates between 20% and 40% depending on revenue. With just weeks remaining before the budget deadline, the future of New Jersey's gaming tax rates remains in the balance. While the full 25% hike appears unlikely, operators are still bracing for some level of increase. The final outcome will depend on behind-the-scenes negotiations among lawmakers, industry stakeholders, and Governor Murphy's administration.
