Senator John F. McKeon Proposes Online Casino Revenue Tax Increase in NJ

New Jersey online casinos may take a huge hit later this year if a new bill gains any ground in the legislature. Senator John F. McKeon recently proposed S3064, a measure that would increase the tax payments on revenues from iGaming, including casino games and sports betting. The amount would almost double for both sectors, meaning higher payments for operators with licensing in the Garden State.

Senator McKeon’s proposal is in the early stages, having yet to be assigned to a committee or be inspected by the New Jersey Office of Legislative Services. The measure is set to considerably boost the tax percentage for online casino and sports betting operators.

Currently, casinos pay 17.4% and sportsbooks pay 14.25%. If the bill gains ground, it would increase the amount to 30%. This will make a huge difference in operators' payments, especially considering the over $180 million in revenues the state is averaging monthly. 

There are currently dozens of online casino operators in New Jersey, with Atlantic City casinos like Resorts, Caesars, and Borgata holding iGaming licensing. These operators are not going to be in favor of a tax hike, especially paying almost double what they were paying previously.

Casino operators have not spoken out about the measure yet, though we expect opposition is coming. Mark Giannatonio, the President of the Casino Association of New Jersey, stated that the organization strongly opposes the tax increase for the online sector.

It is likely that if the casinos start to oppose the measure, it will be stopped dead in its tracks. Most lawmakers tend to favor the casino operators and vote in conjunction with what operators want. It will take a great deal of creativity on Senator McKeon’s part to be able to gain enough support to change the overall tax rate.

A change in the overall tax structure for online casino gaming services and sports betting in New Jersey would have a huge impact on operators. The state’s iGaming market is booming, with each month reaching new heights based on revenue earnings.

In February, the state brought in over $182 million, which was 28% more than the previous year. The amount almost beat out the monthly revenue record from January which was $183.3 million.

So far, the state is on track to increase its yearly totals considerably. The state brought in over $1.9 billion in 2023, a boost of 16% from 2022. This year, the iGaming market is already up 24% from last year, and showing no signs of slowing down.

The biggest earners for February were brands like Golden Nugget, Resorts Digital, and Borgata. Each of these license holders has other iGaming operators utilizing their gaming license. Several operators can offer services from a single license, and all earnings are reported together.

Golden Nugget was able to bring in just over $51 million while Resorts Digital operators earned $48 million. Borgata Casino services brought in just over $40 million.  

These three license holders paid from $7.4 million to $5.9 million in taxes for February. With a higher 30% rate, the amounts would have reached the $13-$11 million mark or higher. It’s a huge difference and would mean far less earnings for operators, though the state would be able to benefit from higher payments.  

It will be interesting to see if the new tax bill will gain ground or be shut down before it even begins. There is no doubt McKeon will be trying to get his bill on a committee docket, but will it have enough support to even be considered?