NJ Online Casino, Sports Betting Tax Hikes Signed Into Law
New Jersey has officially raised its tax rate for online casino, sports betting and daily fantasy sports to 19.75%.
The New Jersey legislature approved a bill Monday afternoon, the final day of the 2025 legislative session, to increase the Garden State’s online gambling tax rate. A 5803 passed the Assembly by a 45-33 vote, and the Senate passed it 25-14.
Gov. Phil Murphy promptly signed the bill into law, confirming reports from last week that he had agreed with state lawmakers on increasing online casino and sports betting taxes as part of his budget for Fiscal Year 2026. Murphy originally proposed a 25% tax rate for online gambling.
Significant increases for all verticals
The tax hike applies to online casinos, sports betting and daily fantasy sports in New Jersey.
Online casinos previously paid a 15% tax rate on revenue. New Jersey sports betting had a 13% tax rate, and daily fantasy sports was taxed at 10.5% The smallest revenue producer of the three, DFS operators will be taxed nearly double their revenue totals moving forward.
That said, New Jersey previously had some of the lowest tax rates in the nation. Many northeastern states have the highest rates, significantly higher than those in New Jersey, including all three neighboring states. New York has a 51% sports betting tax, Delaware has a 50% tax, and Pennsylvania has a 36% tax.
Big money for the state
A 5803 comes as part of Murphy’s $58.8 billion state budget. Online gambling accounts for roughly $700 million of that total.
Truist data estimates that the top five operators would have generated $172 million in additional tax revenue for the state, based on the data from the last 12 months. NJ online casinos are reporting double-digit yearly growth, but analyst Barry Jonas said he thinks that operators can offset some of their tax bill by offering fewer promotions.
Gross income tax accounts for $21.5 billion of the budget, and major taxes account for an additional $27.5 billion. The largest contributors:
- Sales Tax: $14.2 billion
- Business Alternative Income Tax: $4.5 billion
- Corporation Business Tax: $4.1 billion
- Petrolium Products: $1.6 billion
Other tax hikes in budget
In addition to the gambling tax increase, NJ.com reports that the state will now charge a $3 tax on every pack of cigarettes sold, a 30-cent increase. It will also impose a 30-cent tax on all vape sales, up from 10 cents. The state projects to generate an additional $51 million in tax revenue from these hikes.
Luxury home owners will pay more taxes when selling their properties, projecting the state an additional $280 million. The previous 1% realty transfer fee will increase to between 2% and 3.5% for homes worth $2 million or more.
Proposed tax hikes on gun sales, recreational sports, alcohol, transportation, and cannabis products and licenses did not make it into the budget.
The budget mandates that the $2.9 billion State Health Benefits Program cut $100 million in the first half of the fiscal year, which could affect nearly 300,000 state employees and their families. New Jersey’s three property-tax relief programs will remain intact: ANCHOR, Senior Freeze and Stay NJ.
