After a twisting, turning, and sometimes mysterious journey, a bill extending New Jersey’s online casinos for five years has been signed into law by Gov. Phil Murphy.
The new law will allow online casinos to operate through 2028 under the current framework, which allows online casinos to operate via partnerships with retail casinos. The extension also continues the state’s 15% tax rate for online gaming revenue.
How New Jersey’s online casinos started
With the significance of renewing online casinos in New Jersey through 2023, it helps to know the history.
In 2013, then-Gov. Christ Christie signed legislation that legalized online casinos for 10 years. Per the law, online casinos could offer any game that was already played in brick-and-mortar casinos in Atlantic City (the only city in the state allowed to have casinos).
“I am confident that we are offering a responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole,” Christie told the Associated Press.
New Jersey has since become a massive market for online casinos and a lucrative source of tax revenue. Here’s how the numbers from the past 10 years look:
- Online casinos have generated more than $6.2 billion in revenue since 2013.
- The state has received more than $900 million in tax revenue in the past 10 years.
- Monthly revenue has jumped from over $7 million the first month iGaming was live to more than $161 million in May 2023
- March 2023 was the most lucrative month in history, generating $165.7 million
Why New Jersey lawmakers had to renew online casinos
With all the success New Jersey online gambling has experienced, state law gave it a 10-year runway. Other states such as Pennsylvania did not give its online casino legislation a sunset date.
The idea behind the law’s 10-year lifespan was flexibility. If online revenue hurt brick-and-mortar casino traffic, lawmakers could adjust the law to protect casinos. If new advancements in iGaming took place that were outside the scope of NJ law, politicians could revise the law to accommodate the advancements.
Turns out that adjustments weren’t needed. But what did undergo several changes was how long the new extension would last.
Ten years seemed to be the logical timeframe. However, competing timelines were proposed. In one version of the renewal, the extension would last only two years. While no lawmaker gave an on-the-record explanation of the two-year, there was speculation the move was a leverage play.
The state requires Atlantic City casinos to pay a flat fee for revenue each year instead of taxes. The city felt like the new payment structure reduced its cut of tax revenue. As such, it launched a lawsuit against the state.
Insiders believe the two-year deadline was proposed as a way to squeeze casinos into dropping the lawsuit. In theory, such a short renewal period would discourage long-term investment in the NJ online gambling market.
Eventually, lawmakers agreed on a five-year extension. While not ideal, the extension is far better for the city than a two-year renewal.