The move, outlined in Murphy’s FY2026 budget proposal, is expected to generate an additional $402.4 million in revenue, with $322.6 million funneled into the state’s Casino Revenue Fund and $80 million directed toward the General Fund.
Proposed Tax Hikes Create Uncertainty for Operators
Despite the potential fiscal boost, industry experts and legislators have voiced strong opposition to the proposal. State Senators John Burzichelli and Michael Testa criticized the plan, warning that
“doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk.”
New Jersey has long been a leader in the regulated sports betting market, having pioneered the legal fight that led to the Supreme Court’s repeal of PASPA in 2018. Some fear that an aggressive tax increase could stifle growth and make the state less competitive compared to other markets.
While some analysts believe a moderate tax hike is likely, given New Jersey’s deep-rooted ties to the gambling industry, the proposal has already sparked bipartisan resistance in the legislature.
An industry insider noted that
“New Jersey is unique in this space because of the deep history with the casino industry. This is an industry that’s done well by us and done well by them.”
With the state’s budget deadline looming on June 30, discussions will intensify over whether lawmakers will compromise on a more moderate tax increase or reject the hike altogether.
A Troubling Start to 2025 for New Jersey Sports Betting
The regulatory shake-up comes at a challenging time for the New Jersey sports betting market, which posted a significant downturn to start 2025. January revenue for New Jersey sportsbooks fell to $122.2 million, marking a sharp 28.4% decline from the same month in 2024.
The total handle, or the amount wagered, also plummeted by a staggering 33.1% year-over-year, dropping from a record-setting $1.72 billion in January 2024 to $1.15 billion in January 2025.
Leading operators saw notable declines, with FanDuel New Jersey revenue falling by 34.2% to $53.1 million and DraftKings NJ experiencing an 11.5% drop to $35.6 million. However, smaller sportsbooks such as bet365 (+29%) and Hard Rock Bet (+89.8%) showed promising growth, highlighting a shift in consumer betting habits.
The downturn was partially offset by strong betting activity during the NFL Playoffs, which fueled a significant month-over-month rebound from December’s $62.8 million in revenue. However, the numbers still pale in comparison to last year’s performance, raising concerns about the overall health of New Jersey’s sports betting sector.
With the Philadelphia Eagles’ Super Bowl appearance expected to drive a surge in February betting numbers, operators are hopeful for a rebound. However, the looming tax hike proposal casts uncertainty over the industry’s future.
If approved at its current rate, New Jersey’s tax structure would far exceed that of most neighboring states, potentially driving operators and bettors elsewhere.
As the debate over taxation unfolds, the state’s lawmakers and industry leaders must weigh the benefits of increased revenue against the potential long-term consequences for New Jersey’s once-thriving sports betting market.
