Garden State lawmakers may have used a “scalpel” for an online gambling tax hike, but they could be taking a sledgehammer to other forms of mobile wagering.
Key takeaways
- New Jersey's legislature has passed budget-related legislation that increases tax rates for online sports betting and internet casino gambling operators.
- The new tax rate for licensed sportsbooks, online casinos, and DFS companies will be 19.75% of revenue, an increase over the current 13%, 15%, and 10.5% levies imposed by the state.
- Lawmakers also passed legislation that will prohibit online sweepstakes casinos, but the bill contains other measures, such as criminalizing proxy betting.
New Jersey legislators approved a budget-related bill on Monday (A5803) that increases tax rates for the state's online sportsbooks, internet casinos, and paid fantasy sports operators.
The new revenue levy for all three forms of online wagering is 19.75%, up from 13% for sports betting, 15% for iGaming, and 10.5% for fantasy. The bill passed the New Jersey Assembly on a 45-33 vote and the Senate by a 25-14 vote.
Gov. Phil Murphy initially proposed a 25% tax rate for both New Jersey sports betting and casino gaming sites, but lawmakers ultimately hammered out a compromise and landed on 19.75%. What flew under the legislative radar was the tax hike for DFS operators.
Even so, the lower tax increase was agreed upon after pushback from online and brick-and-mortar gaming companies in the state.
Democratic Sen. Paul Sarlo, chair of the Senate’s Budget and Appropriations Committee, said on Monday that "we took a scalpel to some of the governor's proposed revenue raisers."
Sweeping legislation
Both of the legislature's chambers also passed Bill A5447 on Monday, which will prohibit the “sweepstakes model of wagering.”
The bill labels sweeps as illegal online gambling, and defines them as “played online or in-person, in which something of value, such as a prize or prize equivalent, is awarded, either directly or indirectly through means such as a dual currency system of payment that allows a participant to exchange the currency for a prize or prize equivalent.”
While there are criteria allowing for sweepstakes casinos, such as the value of any cash or prizes treated as taxable income, the proposed law generally appears to be a crackdown on sites that popped up across the U.S. in recent years.
Those sites compete for online gambling dollars with sites that have been authorized by New Jersey lawmakers and regulators. Opponents claim sweeps lack the same consumer protections as licensed sites as well.
A5447 includes fines of up to $100,000 for first offenders of the anti-sweeps law and up to $250,000 for repeat violations, among other things. This has rankled the pro-sweeps camp, which claims they are operating legally and responsibly.
“New Jersey has led the way in gaming regulation—not followed,” the Social and Promotional Games Association (SPGA) said in March. “This smart, forward-thinking approach should continue, not be replaced by outdated prohibition.”
The SPGA said on Monday that it "strongly urges" Murphy to veto the bill, which passed by votes of 69-10 in the Assembly and 34-5 in the New Jersey Senate.
"Assembly Bill 5447 seeks to outlaw promotional sweepstakes platforms that are already legal, do not require purchase to play, and are enjoyed responsibly by millions of adults across the country," the group added in a press release.
Proxy war
A5447 proposes more than just anti-sweeps language, though.
The bill would make it a crime to try to rig the outcome of sporting events and wager with inside information on games.
It would also criminalize using someone else's sportsbook account to bet. The same would go for proxy betting, “in which a person risks property with a value of $1,000 or more, having agreed to pay 10 percent or more of the proceeds of the gambling activity to another."
This would have the effect of driving betting liquidity out of NJ (into the unreg market) at the same time the state is trying to raise more tax revenue by increasing the rate to 19.75% GGR (from 13%) (@OLS_LegInfo)
— Joe Brennan Jr (@joebrennanjr) June 30, 2025
It’s possible those provisions could have negative consequences for New Jersey sports betting.
Joe Brennan Jr., co-founder of Prime Sportsbook and a board member for the advocacy group American Bettors' Voice, said on X that the legislation “would have the effect of driving betting liquidity” out of New Jersey and into the unregulated market. It would also do so at the same time as the state is increasing the tax rate on sportsbook operators.
“The language is so broad, it could make @JasonKelce guilty of ‘swindling & cheating’ when he gives his pick on his @nfl pregame show,” Brennan posted.
The tax-hike bill and the anti-sweeps proposal now head to Murphy’s desk for his signature. It’s still possible the governor could use his veto power, as the pro-sweeps SPGA would like.
Nevertheless, New Jersey is on track to join several other states this year in increasing the cost of doing business for online sports betting operators and going after sweepstakes casinos.
Peer pressure
Both Maryland and Louisiana boosted their tax rates for mobile bookmakers earlier this year, to 20% and 21.5%, respectively. Maryland’s governor also sought, like Murphy, an even higher tax hike of 30%, before lawmakers settled on 20%.
Meanwhile, in Illinois, lawmakers recently approved a per-bet tax on online sportsbooks. That followed last year’s decision to increase operators' revenue tax to as high as 40%.
In response to those measures, DraftKings and FanDuel recently announced they'll charge customers a 50-cent “transaction fee” for all mobile bets. Fanatics will add a 25-cent fee, Sports Business Journal reported on Friday.
How those fees will influence bettors remains to be seen, but a survey conducted by Covers suggests it could prompt at least some players to wager less.
Furthermore, anti-sweeps legislation passed this year in New York, Montana, and Connecticut. A California legislator recently proposed a sweeps ban as well, in what could be a critical battle for operators.
Regulators elsewhere, such as in Arizona, Louisiana, and Mississippi, have sent sweeps operators cease-and-desist letters.
