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A bill in the New Jersey Senate would double the tax rate casino licensees pay on their online casino win. As you would imagine, the proposal is not too popular with the companies that hold those licenses.
At the same time, the beneficiaries of such tax revenue in New Jersey could make great use of the extra funds. Even though the funding comes from people playing games, their situation is anything but a game.
Bill S3064 could double New Jersey’s online casino tax to a rate of 30%
Currently, casino licensees in New Jersey pay a 15% tax rate on their wins from online casino play. That’s translated into unprecedented totals of late. New Jersey online casino win totals have hit new single-month records in five of the past six months. That included $197.1 million in March 2024 gaming revenue in NJ.
Regardless, New Jersey Sen. John F. McKeon wants the state to get a bigger share of that money. His bill, S30641, proposes doubling that tax rate to 30%. To be clear, the legislation does not affect the amount of taxes that players of New Jersey online casinos would pay on any winnings.
This potential tax rate escalation only affects casino licensees. For players, any winnings from successful online casino activity are taxed just like any other source of income. How much you pay depends on several factors like your other income.
The fate of S3064 is currently uncertain. It has been assigned to the New Jersey Senate State Government, Wagering, Tourism & Historic Preservation Committee. McKeon is the vice-chair of that committee. The committee currently does not have any hearings scheduled.
When McKeon announced that he would be introducing S3064, it was immediately met by detractors.
NJ online casino licensees could stand in McKeon’s way
The response to S3064 by casino licensees was simple and swift. To sum it up, Casino Association of New Jersey President Mark Giannantonio said that the organization “strongly opposes any proposed tax increase for online gaming.”
If S3064 appears to have any legs to it at all, Casino Association staff will probably be working the ears of New Jersey legislators to oppose the bill. If S3064 becomes law in its current form, it would bring New Jersey online casinos more into line with what their counterparts across the border in Pennsylvania are paying.
Pennsylvania taxes such revenue at a rate of 54% for online slots and 16% for online table games. That makes for an average rate of 35%, close to what McKeon is suggesting. A discussion of McKeon’s proposal is incomplete without considering what the increased tax funds could accomplish.
The other side of the conversation
In New Jersey, gaming tax funds support services for older adults and people with disabilities. For example, for fiscal year 2025, the state projects that it will devote over $596.4 million to such services. For the recipients of such services, additional funding could make a huge difference.
In February, Gene Myers of NorthJersey.com reported2 that people with developmental disabilities in New Jersey are waiting as long as a decade for access to housing services. The need for support services for such individuals is set to only get more drastic, too.
The general population in the United States is aging. The Congressional Budget Office shows3 that the 65-and-older age group in the US is growing at a faster rate than any other age group currently.
Sharon Levine, senior director for governmental affairs & communications for The Arc of New Jersey, says that only makes the need more drastic. Levine explained:
“We hear from families in their seventies and beyond who are still serving as the primary caregiver for their adult child with intellectual and developmental disabilities (IDD). The adult child still lives in the family home. Sometimes, the adult child receives community-based services and in other instances, the family is in no way connected to state services or resources.
Certainly, as the general population in the United States ages, it will become harder for parents to care for their adult children with IDD. We are already seeing the sandwich generation — adults who care for both aging parents and young children — and so we know the pressures and difficulties caregivers are facing and that will only grow with time.”
As far as whether additional funding could make a significant difference for such individuals, Levine said she believes that is the case. “Community providers, the organizations that deliver the hands-on services to people with IDD, 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,” Levine added.
“Potentially, providers could grow and expand the number of group homes in their portfolio to serve more people.”
One of the balancing acts for state governments in dealing with regulated online gambling is maximizing the benefit to the state while still allowing licensees the opportunity to maintain healthy businesses. Many factors play into that premise.
While New Jersey legislators deliberate, people in the state with disabilities wait.
