As expected, the state Senate and Assembly chambers in New Jersey on Monday each approved a boost in online gambling taxes to 19.75% — up from the previous 13% for mobile sports betting and 15% for iGaming.
Gov. Phil Murphy recently agreed to compromise on his original proposal of 25% for each industry, and he is expected sign it into law — effective immediately — as of Tuesday.
Daily fantasy sports, which is or is not considered gambling depending on each state’s laws, was lumped into this bill — and was hit hardest. The industry’s “operating fee,” which had been 10.5%, nearly doubled to the same 19.75%.
The state Senate voted along party lines, with Democrats approving the measure 25-14. But in the Assembly, the Democrats’ 52-28 overall majority only produced a 45-33 vote in favor of the tax hike.
Assemblyman Brian Bergen, a Republican, expressed his disdain for the pervasiveness of gambling advertising.
“People are getting addicted to gambling right now,” Bergen said. “They’re doing it in schools, using their parents’ accounts or older siblings’ accounts, to make bets on everything, every day. And instead of the state of New Jersey doing what’s right, and restricting this, everybody gets so elated about the fact that you can tax it. Then you make policies that encourage it, and it’s disgusting that you do this.
“This isn’t revenue — it’s money that people lost,” he added, in one of the few speeches from either chamber as legislators made dozens of votes on bills on the final day before a two-month summer break. “It’s wrong. This body should be focused on making sure our kids are protected, instead of sucking every dollar we can out of it.”
The tax hike follows in the footsteps of other states such as Louisiana and Illinois that have raised previous tax rates in recent months.
Dark days for sweeps, DFS
Another national trend of late has been a crackdown on online gambling with sweepstakes prizing — and New Jersey lawmakers went after that on Monday as well. The Assembly (69-10-1) and Senate (34-5) approved a sweepstakes ban by virtually identical margins.
As for daily fantasy sports, the doubling of New Jersey’s share of the industry’s total revenue pales in comparison to what may be about to happen in California. There, Attorney General Rob Bonta is widely expected to release an opinion this week declaring multiple forms of DFS illegal in the nation’s most populated state.
As a preemptive strike before the release of such an opinion, Underdog Fantasy has filed suit in a California Superior Court, seeking a preliminary injunction and a writ of mandamus to block the AG’s opinion, arguing that Bonta does not have the statutory authority to issue an opinion that is based on factual questions, not a purely legal matter.
