The state that led the charge to bring legalized sports betting to the masses, and the governor whose name will forever be synonymous with that effort, are now weighing whether the cost of offering online gambling needs to go up.
New Jersey Gov. Phil Murphy presented his recommendations for the Garden State's fiscal 2026 budget on Tuesday, and it includes significant hikes to iGaming and online sports wagering tax rates.
For the year ending June 30, 2026, the Murphy administration is proposing to boost both rates to 25%.
Currently, online sportsbooks in New Jersey are subject to a 13% tax rate, while iGaming operators face a 15% levy.
“In total, the proposed tax rate change will increase internet gaming and sports wagering revenues deposited into both the State’s General Fund and Casino Revenue Fund by $402.4 million,” the “Budget in Brief” says.
New Jersey Gov. Phil Murphy's FY 2026 budget proposes to hike the state's iGaming and online sports betting tax rates to 25% from their current 15% and 13% levels. pic.twitter.com/pWjENVWqw4
— Geoff Zochodne (@GeoffZochodne) February 25, 2025
While there is no guarantee the tax hikes survive the budget process and are imposed on operators, they represent a major potential headwind for online casinos and sportsbooks. Moreover, it is blowing from one of the biggest and most influential internet gambling markets in the U.S.
New Jersey has had legal iGaming since 2013 and legal sports betting since 2018, the latter of which began after the state fought for event wagering all the way to the U.S. Supreme Court. That case bears a name reflecting who New Jersey’s governor was at the time of the court’s decision: Murphy v. NCAA.
Since that decision paved the way for widespread sports wagering legalization in the U.S., both iGaming and online sports betting have generated significant tax revenue for New Jersey. In 2024, for instance, sports betting alone yielded $141.2 million in tax revenue.
Et tu, New Jersey?
But Murphy’s proposed tax hike also follows similar moves in Ohio and Illinois in recent years, where governments boosted the cut of revenue they take from sportsbook operators.
The increased cost of doing business in those states have prompted companies to adjust their operations there. It even contributed to DraftKings' proposal of an additional surcharge for bettors in higher-tax jurisdictions, which the bookmaker ultimately scrapped.
Yet the tax hikes have come as the sports betting industry has been the target of criticism over concerns about advertising and addiction, among other things.
Amid that climate, Ohio Gov. Mike DeWine has proposed another doubling of his state’s tax rate this year, while Maryland Gov. Wes Moore has recommended a hike of his own.
With all that said, it appears likely that the tax hikes in New Jersey will face pushback from other lawmakers. Whether that is enough to fight them off remains to be seen.
“Simply put, doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk,” Sens. John Burzichelli and Michael Testa said in a statement on Tuesday, according to Politico.
