New Jersey Governor Murphy Signs New Tax Laws for Sports Betting
New Jersey Sports Betting Tax Update
On Jan. 18, New Jersey Governor Phil Murphy signed a bill that gives tax breaks on credits used to incentivize gamblers to brick-and-mortar casinos and online operators linked with them in the state.
Promotional gaming credits available for taxation include credits, tokens, or other incentives that get players to place a wager. Promotions include deposit-matching bonuses, risk-free wagers, and other similar other value deals.
This law comes into play just a few weeks after the New York launch of online betting. This launch was widely expected by industry experts to affect the New Jersey gambling market, as many New Yorkers crossed the border to place bets in New Jersey before its legalization in the Empire State. With more incentives available to bet in New Jersey, they may be trying to combat the foreseeable changes in the New Jersey market. The new law is expected to entice gambling operators to give out more credits since the revenue from their promotional credits is not subject to the usual tax that wagering is subject to.
According to the fiscal estimate of this bill, Bill A4002, “the first $12 million of promotional gaming credits for Internet sports wagering issued by all casinos and racetracks that hold a sports wagering license would still be taxed, but any amount in excess would be deductible from the gross revenues for Internet sports wagering. The first $8 million of promotional gaming credits for non-Internet sports wagering issued by all casinos and racetracks that hold a sports wagering license would still be taxed, but any amount in excess would be deductible from the gross revenues for non-Internet sports wagering.”
Governor Murphy & Bill A4008
Originally, the bill was set to benefit brick-and-mortar casinos and internet gambling until it was later adjusted to benefit brick-and-mortar casinos exclusively, per Gov. Murphy’s recommendation.
Gov. Murphy submitted a conditional veto to the bill in November after its approval by the House and the Senate. The veto read, “while operational closures resulting from the Coronavirus disease 2019 (COVID-19) pandemic harmed the State’s tourism economy generally, and the brick-and-mortar casino and racing industries, in particular, online casino gambling and online sports wagering operations have thrived. In fact, these operators have seen record performances during recent months, with sports pool operators taking in more than $1 billion in bets with the State’s licensed sportsbooks in September 2021 alone, over 90 percent of which was wagered through online sportsbooks.”
This bill comes after two years of a pandemic that significantly hurt brick-and-mortar establishments specifically. However, since 2020 gambling revenue has seen much improvement. In fact, from December 2020 to December 2021, the New Jersey gambling market saw a 29.1% increase.
“It’s good for customers because they get the promotional gaming credit, and it’s good for the casinos and racetracks because they get the tax deduction,” said Trenton lobbyist Bill Pascrell.
Some people, Pascarell included, believe that online operators should not be left out of the bill or treated differently on the basis of just being online, as everyone suffered through the fate of the pandemic. “Why should online gaming companies at racetracks be treated differently than online gaming companies at the casinos?” Pascarell asked.