New Jersey Governor proposes OSB and igaming tax hike to 25%
Phil Murphy outlines 2026 budget blueprint that projects to generate an additional $400m in collected taxes from operators
New Jersey Governor Phil Murphy has proposed raising the online sports betting and igaming tax rates on gross revenue in the state to 25% as part of his 2026 budget.
The hike would mean sports betting rises more than 10 whole percentage points from its current rate of 14.25%.
A 25% sports betting tax would leave New Jersey above the national average of around 20% but some way behind commercial states like New York (51%), Pennsylvania (36%) and Vermont (31%). Illinois has a graduated system of 20% to 40%.
However, it would put the Garden State above North Carolina (18%), Tennessee (20%), Virginia (15%) and Connecticut (13.75%).
On the online casino front, operators are currently taxed at 17.5%, with the move to 25% representing a 7.5 percentage point leap.
According to the American Gaming Association (AGA), online casino operators are taxed at a base rate of 15%, with a 2.5% community investment alternative tax also paid, taking the blended rate to 17.5%.
Murphy’s budget did not detail if the community investment alternative tax would remain in place.
Governor Murphy’s budget proposal notes that by hiking the tax rate on sports betting and igaming operators, he hopes to generate an additional $402.4m (£138.1m) in taxes for state coffers.
The proposal is expected to raise $322.6m for New Jersey’s casino revenue fund, a scheme that helps fund public transport, nursing, disability and family health services.
A further $80m derived from sports betting would be added to the state’s general fund, the budget outlined.
Sports betting has had a slow start to 2025 in New Jersey, with data from the state’s Division of Gaming Enforcement (DGE) revealing a 28.4% year-on-year (YoY) slump in January revenue for operators to $122.2m in gross revenue.
However, igaming has showed little sign of running out of steam, as revenue jumped 20.9% YoY to $204.7m last month.
If Governor Murphy’s proposal comes into effect, New Jersey’s igaming market, which launched in 2013, would have one of the harshest tax rates among states with legal commercial igaming, surpassing all bar Michigan (20% to 28% depending on revenue thresholds) and Pennsylvania’s 54% tax on online slots.
Rhode Island’s monopoly is overseen by Bally’s, with a 50% tax on online slots and 18% on table games.
New Jersey will have until June 30 to finalize the budget for 2026.
Across the US, 2025 has seen states table bills to raise taxes or include hikes in budgets, including Maryland, Massachusetts and Ohio.
In Maryland, Governor Wes Moore’s 2026 budget proposed doubling the sports betting tax from 15% to 30%, while Ohio Governor Mike DeWine suggested taking the rate from 20% to 40% in his 2026-27 budget.
Massachusetts senator John Keenan put forward a bill to hike online sports betting tax from 20% to 51%, putting it in line with New York.
Tax rises made industry headlines last year after Illinois implemented a progressive rate of 20% to 40%, based on operators’ annual GGR, as it ditched its flat 15% rate.
DraftKings had planned to implement a surcharge on winning bets in states with taxes above 20%, yet the policy was axed following customer backlash.