New Jersey Implements Tougher Gambling Regulations and Increased Taxes

July 1, 2025

News

New Jersey Enacts Increased Taxes on Online Gambling and Cracks Down on Sweepstakes Casinos

New Jersey lawmakers have approved comprehensive gambling reforms aimed at increasing tax revenues and regulating unlicensed gambling operations. The legislation, passed on June 30, awaits Governor Phil Murphy’s signature to become law. These changes include higher taxes on online betting activities and stricter control over sweepstakes casinos operating in legal uncertainties.

Flat 19.75% Tax Rate Introduced for Online Gambling Operators

The newly passed budget provisions impose a uniform tax rate of 19.75% on online gambling businesses, including sports betting sites, internet casinos, and daily fantasy sports (DFS) providers. Previously, tax rates ranged from 10.5% to 15% depending on the gaming category. Governor Murphy initially proposed a 25% tax hike, but after industry resistance, lawmakers settled on the moderate new rate. This adjustment positions New Jersey alongside other states such as Maryland and Louisiana, which have recently raised mobile betting taxes. Similar tax increases in Illinois have prompted betting companies to implement fees for customers to offset the added costs.

Legislation Targets Sweepstakes Casinos with Significant Penalties

Alongside tax changes, lawmakers approved Bill A5447, designed to regulate sweepstakes casinos that often operate in ambiguous legal zones. The bill classifies such platforms — commonly relying on virtual currencies redeemable for prizes — as unlicensed gambling operations, proposing fines of up to $250,000 for repeated violations. Supporters argue this measure is necessary to safeguard consumers due to the lack of proper oversight on these sweepstakes venues. Meanwhile, the Social and Promotional Games Association (SPGA) opposes the bill, urging the governor to veto it. The SPGA asserts that their members comply with existing laws and warns that this legislation could eliminate entertaining options for both casual and competitive players.

Additional Rules to Ensure Fair Play and Education on Gambling Risks

Bill A5447 also introduces criminal penalties to prevent deceptive betting practices, such as wagering using another person’s account or placing bets on behalf of others when large sums are involved. However, some industry figures express concern that ambiguous language might criminalize common activities like public sports discussions or sharing betting advice. In response to the rising concern over youth gambling, New Jersey is considering a bill requiring high schools to educate students about gambling addiction. This initiative aims to inform young individuals about the financial dangers and psychological impacts associated with gambling. The state’s Council on Compulsive Gambling supports education efforts, underscoring New Jersey’s commitment to balancing revenue generation from gambling with social responsibility. These reforms reflect the state’s ambition to lead in establishing comprehensive, responsible gambling regulations.