New Jersey Governor Phil Murphy's fiscal year 2026 budget proposal is sparking significant debate as he seeks to increase tax rates on sports betting and online casinos in the state.
The proposed hike would raise the current rates from 13% and 15%, respectively, to 25% across the board, triggering strong reactions from operators and prompting a public relations campaign against the measure.
The list of operators that would be affected includes:
- Borgata Online Casino
- FanDuel Casino
- Caesars Palace Online Casino
- BetMGM Casino
- DraftKings Casino
- Golden Nugget Casino
- PlayStar Casino
There are nearly 20 legal online casinos in New Jersey, and the proposal comes on the heels of a strong start to the year for traditional casinos in the Garden State, with revenue rising nearly 3% in January.
A Bold Move for State Revenue in The Garden State
"The tax increase on sports betting and iGaming is part of a broader agenda to generate $1 billion in tax revenue across various sectors, including cigarettes, alcohol, and cannabis. Murphy's proposal aims to support a state spending plan that now exceeds $58 billion annually."
Should the proposal pass, the tax hike could bring in an estimated $402.4 million each year from the gambling sector alone—totaling $725 million across both industries. This is due to New Jersey recording a state-high $12.77 billion in sports wagers in 2024 and generating a total gambling revenue of $6.3 billion, a 9% increase from 2023.
Online gambling contributed a significant amount to the final revenue figures last year.
New Jersey online casinos in particular gained traction, pulling in a record-breaking $2.39 billion, up 24% from the prior year.
BetMGM and FanDuel (NJ) Push Back
New Jersey’s tax proposal has not been warmly welcomed by major players in the gambling industry.
Companies like BetMGM and FanDuel NJ are actively rallying their customer bases, encouraging them to contact state representatives and oppose the tax rate increase. BetMGM operates several online casinos and sports betting platforms in New Jersey, while FanDuel leads the market in both areas.
FanDuel online casino sent letters to customers in New Jersey asking them to fight the proposed tax increase on gambling operators in the The Garden State.
BetMGM warns that the higher tax could drastically reduce online casino promo code offers and competitive odds. Ironically, the company just celebrated a massive progressive jackpot win by a New Jersey man and flew him to Las Vegas for a weekend in his honor.
The increase, if enacted, would significantly elevate the existing tax obligations of these operators. Correspondingly, they argue, it could stifle the competitiveness of the New Jersey market—a market that stands out as the oldest legal U.S. market outside Nevada.
New Jersey: The Birthplace of Online Casinos
New Jersey holds a special place in U.S. gambling history, having played a pivotal role in legalizing sports betting nationwide.
It was New Jersey that challenged the Professional and Amateur Sports Protection Act (PASPA), leading to its invalidation by the U.S. Supreme Court in 2018. But even before this landmark decision, New Jersey had made history by offering legal online casinos starting in 2013.
The New Jersey Division of Gaming Enforcement was tasked with implementing regulations and conducting licensing and technical investigations for this pioneering move that paved the way for the state's flourishing iGaming industry, which continues to generate significant revenue and innovation.
Plan Part of Wider Tax Changes in New Jersey
The proposed tax hikes on gambling are part of a broader fiscal strategy targeting various areas. Already in 2025, residents have seen increases in the state gas tax, highway tolls, and mass transit fares. Additionally, Murphy intends to expand the 6.6% state tax to more “services and transactions.”
There is also an ongoing fight to ban smoking in traditional casinos in New Jersey, so there’s a lot going on at the moment.
As the debate over the budget and taxes unfolds, it remains to be seen how these changes will affect New Jersey's economy and its position as a leader in the gaming industry.
