Gov. Phil Murphy has outlined his new state budget, touching on several sectors, and notably, online gambling and online sports betting.

His proposal, though, has the sector up in arms, as the governor is looking to slap a 25% blanket tax on both sports gambling and casinos, up from 13% and 15% respectively.

New tax hike elicits strong objection from gambling industry leaders

The move, argues the governor’s office, could see as much as $400m in additional tax revenue collected by the Garden State, but while this seems alright on paper, there are wider implications that could actually sap the sector’s competitiveness. The proposal is hardly unique as Louisiana was one of the states to recently explore a similar idea.

The announcement met with sobering scepticism from the Sports Betting Alliance (SBA), which represents some of the biggest companies that run a successful business in the state, among which are BetMGM, FanaticsSportsbook, FanDuel, and DraftKings.

Naturally, the SBA did not take kindly to the proposal and objected to its practicality, stressing the potential negative consequences it could have. The organization stressed the economic impact casinos and gambling companies have already had on the Garden State, creating thousands of jobs and generating hundreds of millions of revenues paid directly to the government.

Raising the tax across the board would have a negative impact on the sector’s competitiveness and also put companies at a strong disadvantage compared to the unregulated and offshore markets, the SBA cautioned. However, a lot of the offshore operators have been attacked head-on in New Jersey, with many withdrawing from the market under threat of being targeted by the US Department of Justice.

Among the people to speak out against the proposed tax hike has been Resorts Casino Hotel President and Casino Association of New Jersey President Mark Giannantonio who argued that the tax increase would "threaten the stability of Atlantic City’s gaming and tourism industry, as well as the industry’s workforce," cited by the Atlantic City Press.

However, taxing the gambling sector more has become a trend. Mississippi, Maryland, Ohio, Pennsylvania, and Michigan have all put forward such measures seeking to hike the gambling tax in order to raise additional revenue for state coffers. Massachusetts is similarly looking to potentially introduce iGaming, but also hike the tax rate.

Tax increases happening all over the United States

The industry response everywhere has been the very same – increasing gambling tax could only hurt the long-term competitiveness of the market and lead to reduced jobs, as well as depress wages, along with ceding ground to the offshore and black market.

Mississippi has pushed for a land-based casino tax hike to 12% from previously 8% and Ohio Governor, Mike DeWine, is now looking to double the tax for the second time in as many years – from currently 20% to 40% if he has his way.

How these taxes would affect the gambling industry and whether stakeholders’ premonitions for the worst would pan out remains to be seen. Tax increases in gambling are coming.

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