In a bold fiscal move, New Jersey Governor Phil Murphy has proposed significant tax increases on online sports betting and internet gambling, sparking widespread concern among casinos and betting firms. The proposed hikes, which would see taxes on both sectors rise to 25% from their current rates of 13% and 15%, respectively, are part of the Governor’s broader budget plan aimed at bolstering state revenues. Despite the anticipated additional $402.4 million in revenue, the gambling industry argues that this could destabilize the burgeoning sector.

Casino association and sports betting firms rally against tax increases:

The Casino Association of New Jersey (CANJ) and major players in the sports betting industry, including the Sports Betting Alliance, have voiced strong opposition. Bill Pascrell III, a seasoned industry lobbyist, emphasized the negative implications of the tax increase, stating, “This is a terrible idea,” and announced plans for a robust lobbying and public education campaign to contest the Governor’s proposal, as reported by The Press of Atlantic City. The opposition is grounded in concerns over the economic impact on Atlantic City’s casinos and the broader implications for employment and revenue in the state.

Atlantic City casinos, still reeling from the economic effects of the COVID-19 pandemic, fear further financial strain under the new tax regime. Six out of nine casinos in the city are reportedly generating less from in-person gamblers now than before the pandemic. The CANJ has warned that the tax increase could “jeopardize our properties and ultimately hurt the working-class people it supports,” potentially leading to reduced consumer spending and diminished tourism, which are vital for the city’s economy.

Experts and analysts are also weighing in on the potential repercussions. The Wall Street firm Jefferies Equity Research has projected significant financial impacts for major betting firms like Flutter and Entain, with possible reductions in free bets and less favorable odds for consumers. Furthermore, the proposal has prompted a broader discussion about the competitiveness of New Jersey’s gambling market, with fears that higher taxes could drive consumers towards unregulated and offshore operators.

Legislative hurdles and political opposition:

The tax proposal faces a uncertain path in the Democrat-controlled New Jersey Legislature, where it has met with bipartisan skepticism. Influential state senators from both parties have expressed opposition, arguing that the tax hike could undermine a successful industry that has been a significant source of revenue and job creation for the state. The future of the proposal remains in doubt, with ongoing debates likely to shape the legislative response.

As the debate unfolds, the stakes are high for both the state government looking to fill budget gaps and an industry wary of the financial burdens that may come with higher taxes. The outcome will not only affect New Jersey’s fiscal health but also set precedents for how states balance economic development with revenue generation from burgeoning sectors like online gambling.