New Jersey is one of the most robust markets for online casino operators. While demand for online poker, slots, and table games may be as strong as ever in the state, a new proposal could make operating in New Jersey less lucrative for online casino licensees.
A New Jersey senator has proposed significantly elevating the state’s tax rate on revenue those licensees report. That could make the state’s online casino landscape far more lucrative for New Jersey’s coffers. At the same time, the bill might face significant opposition from the state’s gaming industry.
New Jersey’s S3064 could drastically increase online gaming taxes
The bill, New Jersey’s S3064, has only been pre-filed at this point. Sen. John F. McKeon’s proposal has yet to see a committee assignment or undergo an initial inspection from the New Jersey Office of Legislative Services.
What is obvious, though, is that the bill would escalate New Jersey’s tax rate for online casinos and online sports betting revenue to 30%. The rates for those types of gaming currently sit at 17.4% and 14.25%, respectively.
That rate hike could mean a difference of hundreds of millions of dollars in tax revenue for the state. For example, if 30% had been the rate that online casino licensees had been paying since the state legalized such gaming in 2013, New Jersey would have collected almost a billion dollars more in taxes on New Jersey online casinos.
While that money only exists in the realm of the hypothetical, this legislation may also only exist in that space. The proposal could face stiff opposition from a powerful lobbying arm in the state legislature.
Atlantic City casinos might move to kill bill
Atlantic City casinos do get some revenue from online casino activity in New Jersey. While it pales in comparison to what they glean from in-person gambling in their facilities, they do have a horse in this race.
A higher tax rate on online casino revenue, therefore, could mean their piece of the pie would get smaller. Thus, S3064 could see substantial opposition. Atlantic City casinos are among the most powerful lobbying units in Trenton.
Regarding the legislation, Casino Association of New Jersey President Mark Giannantonio said that the organization “strongly opposes any proposed tax increase for online gaming.”
Consider, for example, that the casinos have been able to effectively lobby for a revenue-sharing program with the state that excludes any revenue they get from online gambling activity instead of paying property taxes. While those changes to the casinos’ PILOT (Payments In Lieu Of Taxes) program are pending litigation, that clause was in the law at the heart of the lawsuit.
If the casinos do mount an opposition, S3064 might be effectively dead upon arrival to whatever committee it lands in.