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Prior to the New Jersey legislature adjourning for its two-month summer recess, lawmakers passed two key gaming reform bills to increase taxes for online gambling and prohibit online sweepstakes casinos.
As expected, the state Senate and Assembly both approved A5083, increasing the state tax rates for internet gaming and online sports betting to 19.75 percent of gross revenue.
The bill also increases the tax rate on daily fantasy sports (DFS) from 10.5 percent to 19.75 percent.
New Jersey currently taxes iGaming and online sports betting at a rate of 15 percent and 13 percent of adjusted revenues, respectively.
Online casino operators also pay an additional tax of 2.5 percent, while sports betting is subject to an additional tax of 1.25 percent, meaning the new effective tax rates will be 22.25 percent and 21 percent of gross revenues, respectively.
In his initial budget proposal, unveiled in February, New Jersey Governor Phil Murphy, a Democrat, proposed an increase to 25 percent for both sports betting and iGaming, which would have generated more than $402m in new tax revenue. However, there was little support from lawmakers inside the state capitol in Trenton for such a significant increase gaming taxes.
Murphy signed A5803 into law late Monday as part of a package of 20 bills accompanying the Appropriations Act that established New Jersey’s budget at $58.8bn for fiscal year 2026, which began on Tuesday (July 1).
The Assembly approved the bill by a 45-33 vote, a narrower victory than expected in a chamber where the Democrats have a 52-28 majority. The legislation was then sent to the Senate where it was approved by a 25-14 vote.
Republican Assemblyman Brian Bergen expressed his disgust with gaming and the taxes it generates for the state.
“This bill really, really bothers me,” said Assemblyman Brian Bergen, a Republican who has introduced a bill to ban all advertising for sports betting in New Jersey.
“So, you tax it and make policies that encourage it. It’s disgusting that you do this. This isn’t revenue; this is money people lost.
“It’s wrong. I’m ashamed you would do this,” Bergen added. “Instead, the body should focus on making sure our kids are protected instead of sucking every dollar we can out of it.”
Taxing Gaming To Fill Budget Holes
While taxes on online casino games are also being increased, New Jersey is not the only state to raise sports-betting taxes in 2025.
Maryland Governor Wes Moore recently signed a budget bill into law that increases his state's sports betting tax rate to 20 percent, up from 15 percent. Moore originally proposed an increase to 30 percent.
Illinois Governor J.B. Pritzker, a Democrat, also signed a state budget that included a provision taxing sports-bettong operators an additional 25 cents on every wager up to the first 20m wagers accepted annually. Every wager beyond 20m will be taxed at 50 cents per wager.
The new tax rates in Maryland and Illinois both went into effect on Tuesday, along with New Jersey's.
Additionally, Louisiana Republican Governor Jeff Landry signed House Bill 639 into law last month to increase the tax rate on online sports betting from 15 percent to 21.5 percent.
The new Louisiana tax rate will go into effect on August 1.
Sweepstakes Bans Awaits Governor’s Signature
In addition to the tax increases, Murphy is also expected to sign a comprehensive bill that would update New Jersey’s anti-gambling laws, including introducing a ban on dual-currency sweepstakes platforms that mimic casino-style games or sports betting.
The bill - A5447 – also sets higher fines and penalties for unlawful online gambling operations, imposes stricter restrictions on match-fixing and betting-related manipulation of sporting events, and appears to criminalize professional proxy betting in New Jersey by making it an offense to gamble $1,000 or more “having agreed to pay 10 percent or more of the proceeds of the gambling activity to another”.
The bill was approved in the Assembly by a 69-10 vote with one abstention, before being substituted for S4282 and passed by the Senate on a vote of 34-5. Both chambers passed the bill without debate.
In a statement, the Social and Promotional Games Association (SPGA) described the bill’s passage “as a gift to casino lobbyists, and a blow to digital freedom”.
“This bill doesn’t just mischaracterize an entire industry, it ignores data, undermines innovation, and puts New Jersey’s reputation as a forward-thinking leader in tech and entertainment at risk,” an SPGA spokesman said.
Although the broader bill was approved at almost the same time as the tax increase, New Jersey insiders said the two legislative developments were not connected.
David Rebuck, a former director of New Jersey's Division of Gaming Enforcement, said A5447 was designed to modernize the state’s antiquated gambling laws.
“The historical statutes predated the concept of accessing the internet to engage in online gambling,” Rebuck told Vixio GamblingCompliance. “Although categorized as a ban on online sweepstakes, the bill as passed by the Senate and Assembly is much more comprehensive in updating, addressing, defining and enforcing gambling access in today’s market in New Jersey.”
If signed into law by Murphy, New Jersey will be the fourth state to take action against sweepstakes this year. The governors of Montana, Connecticut and Nevada have signed bills to tighten laws on illegal online gambling.
In neighboring New York, Democratic Governor Kathy Hochul’s signature is the last step required for the state to implement a ban on online sweepstakes casinos. The SPGA has called on Hochul to veto S5935A, saying the measure “threatens to kill investment” by singling out individual investors and investment firms for investing in sweepstakes sites.
Meanwhile, a similar California bill to ban online sweepstakes platforms will get a hearing on Tuesday (July 8) in the Senate Governmental Organization Committee.
Assembly Bill 831 was amended by Democratic Assemblyman Avelino last month by striking its prior language and turning the measure into a bill to ban dual-currency online sweepstakes sites that offer games that mimic sports betting and casinos games.
