New Jersey’s online casino market is thriving but one legislator believes the time has come to double the taxes that licensees pay on revenues while the gaming operators vehemently disagree.
Let’s take a look at the reasons behind this increase and its potential on top-rated sportsbooks throughout the state.
Tax Hike Cometh?
It’s far too early to speculate how successful New Jersey State Senator John F. McKeon’s bill, S-3064, will be but should it pass muster with the legislature and ultimately the governor, online casino operators will see their tax rate increase from 15% to 30% of their gross revenues.
It is undoubtedly a healthy increase but one that is commensurate with the 35% average tax that Pennsylvania levies on iGaming companies operating in the Keystone State.
“Revenue from online gaming is exploding, and New Jersey is currently taxing this money at a much lower rate than nearby states,” said Senator McKeon. “Raising the tax on online gambling revenue will put us on par with our neighbors. Part of these additional funds will also be dedicated to prevention, education, and treatment programs for compulsive gamblers so that we can help more people in need of these important services.”
Taxing the Chips
The taxes on players’ winnings will not change, this tax would only affect New Jersey’s iGaming operators. However, the pushback has already started and it could be a long haul in the legislature to get the bill passed considering the influence and political power of the gaming community in the Garden State.
The bill has advanced to the New Jersey Senate State Government, Wagering, Tourism & Historic Preservation Committee, of which Senator McKeon is vice-chair. The effort to bring in additional funds to the state could, in part, be motivated by competition from New York’s three downstate casinos that have yet to be built.
Some industry pundits have speculated that once those casinos are built it will pull customers away from Atlantic City and cannibalize some of its casino business. Should those revenues be adversely impacted, the state will also suffer decreased revenues from those smaller casino profits.
Not So Fast
It wasn’t long before New Jersey’s gaming community caught wind of Senator McKeon’s bill which triggered an immediate and predictable response. Mark Giannantonio, the Casino Association of New Jersey President, said his organization “strongly opposes any proposed tax increase for online gaming.”
His organization is a formidable adversary as evidenced by a previous political battle. Despite winning approval in both chambers, New Jersey’s complete ban on smoking inside casinos eventually stalled. Casino operators fought mightily against the ban, contending that they have already dedicated 75% of their casino floors to non-smoking, and without the remaining 25% designated as a smoking section, gamblers who smoke would go elsewhere.
The Arc of Contention
Many are envisioning the same vigilant opposition to a tax increase from the Boardwalk operators, which is why this bill is viewed with some skepticism by tax increase advocates. Yet, there will be plenty of organizations that could benefit from additional funding spurred by the doubling of online casino taxes.
Sharon Levine, senior director for governmental affairs & communications for The Arc of New Jersey, is one such advocate, stating, “Community providers, the organizations that deliver the hands-on services to people with IDD (intellectual and developmental disabilities), would be able to use the increased funding to offer an increased number of residential placements for individuals who require the higher-level care available through the Community Care Program.”
