New Jersey Considers Higher Gambling Taxes as Nationwide Trend Continues

New Jersey Governor Phil Murphy has set forth an ambitious spending plan of $58.1 billion for 2025, partly funded by notable tax increases on sports betting and iGaming. If approved, the proposal would raise both the sports betting and iGaming tax rates to 25%, up from 13% and 15%, respectively.

As states across the US search for new revenue streams, Murphy’s plan follows a broader trend of lawmakers reconsidering gambling tax policies. This article provides an overview of the New Jersey proposal, the response from industry stakeholders, and how the situation fits into the bigger picture of gambling taxes nationwide.

1. The Latest Gambling Tax Proposal in New Jersey

Governor Murphy unveiled his 2025 budget on 25 February, outlining various tax hikes to fund major public projects and initiatives. For the sports betting and iGaming sectors, he proposed increasing tax rates to 25%. This move comes nearly seven years after New Jersey first legalized sports betting, following the historic 2018 Supreme Court decision that overturned the Professional and Amateur Sports Protection Act (PASPA).

Key Points of the Proposal

• Sports betting tax rate would jump from 13% to 25%
• iGaming tax rate would increase from 15% to 25%
• Part of a broader budget plan totaling $58.1 billion

For an industry that helped make New Jersey a gambling powerhouse, this proposed increase is raising concerns among operators, industry lobbyists, and local lawmakers.

2. Industry Pushback and Concerns

Sports Betting Alliance (SBA)

The Sports Betting Alliance (SBA), whose members include BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel, quickly voiced opposition. Jeremy Kudon, speaking on behalf of the SBA, described the proposal as “a wrong turn for New Jersey.”

“Raising sports betting taxes will make sports betting more expensive for customers, slow operator investments in jobs and local business partnerships, and put the regulated industry at a disadvantage to unregulated and offshore operators,” Kudon said.

iDevelopment Economic Association (iDEA)

The iDevelopment Economic Association (iDEA) echoed these sentiments, emphasizing that regulated sports betting and iGaming have delivered significant revenue and job creation since being legalized.

“It is baffling why the governor would seek to undermine this by imposing even more taxes on an industry that is already exceeding its economic promise,” stated Jeff Ifrah, co-founder of iDEA.

With unregulated and offshore competition continuing to operate outside state laws—and without paying taxes—critics argue that higher levies on the regulated market could inadvertently push consumers to illegal avenues.

3. A Growing National Trend

New Jersey’s proposed tax hike is just one example in a wave of gambling tax legislation appearing across the country. In Ohio, Governor Mike DeWine successfully doubled the sports betting tax rate from 10% to 20% in 2023 and has introduced a budget to raise it further to 40%. Meanwhile, Illinois adopted a tiered tax system last year that ranges from 20% to 40%, up from a flat 15%.

Other States in Focus

• Mississippi: A legislative committee recently advanced a bill to raise land-based casino taxes from 8% to 12%.
• Louisiana: A proposed bill in November sought to raise digital sports betting taxes from 15% to 51%, though it did not pass.
• Maryland: Governor Wes Moore wants to increase the sports betting tax from 15% to 30% and boost the table games tax from 20% to 25%.
• Massachusetts: Lawmakers have introduced a second attempt to raise the current 20% rate to 51%, echoing New York’s existing high-tax model.
• Michigan: In December, legislators proposed a 0.1% increase on sports betting and a 1% bump for iGaming.
• Pennsylvania: Governor Josh Shapiro’s budget proposal includes a 52% tax on skill games, seeking parity with regulated casino slot machines taxed at 54%.

4. Lawmakers Push Back and Look Ahead

While Governor Murphy’s proposal has garnered criticism, it remains uncertain whether the New Jersey legislature will support the changes. Some lawmakers, especially from southern New Jersey, have already publicly denounced the plan, citing risks to an industry that has been instrumental in revitalizing Atlantic City and the state’s gambling economy.

“Simply put, doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk,” said a group of south New Jersey senators.

In Ohio, there has also been notable legislative resistance to Governor DeWine’s repeated attempts to raise the sports betting tax rate. This kind of pushback could lead to compromises—such as slightly lower tax rates—if lawmakers agree to revise the initial proposals.

5. Economic Impact and Industry Outlook

Industry experts warn that a rise in taxes could hamper further investment and growth. B Global principal Brendan Bussmann argues that operators must better educate lawmakers on how higher taxes can limit the competitive nature of legalized gambling, making regulated platforms less appealing to customers compared to illegal alternatives.

“The irony is in a state (New Jersey) that has made economic development of the iGaming industry a priority, the governor literally slapped them across the face with the proposed tax increase,” Bussmann said. “We’re in this mess because we have failed to properly educate stakeholders on a business model for years.”

Despite these concerns, some analysts, such as those from Deutsche Bank, anticipate the New Jersey proposal is “likely” to pass, although potentially with minor adjustments that bring the final rates below 25%.

6. Conclusion

New Jersey’s push to raise gambling taxes mirrors a nationwide movement where states see the rapidly expanding sports betting and iGaming markets as prime targets for revenue. Yet, higher tax rates may also discourage legal operations, cutting into the same revenue stream lawmakers hope to bolster.

Balancing public revenue goals with maintaining a thriving, competitive gambling sector will remain an ongoing challenge. As more states legalize sports wagering, the tension between tax policy and market viability will continue to shape the future of US gambling regulation.

Key Takeaways

• New Jersey’s proposed jump to 25% taxes for sports betting and iGaming aligns with a broader trend of increasing gambling levies.
• Industry groups like the Sports Betting Alliance and iDEA argue that higher taxes could drive bettors to unregulated markets and hinder economic growth.
• Other states—including Ohio, Illinois, and Maryland—are also reassessing or have raised gambling taxes, suggesting this trend may persist.
• Legislative pushback may temper some of the more extreme proposals, though analysts predict at least partial passage of New Jersey’s gambling tax hikes