What Are the Tax Implications of Betting on Sports in New Jersey?
Compared with other states looking to offer legalized sports betting, New Jersey's tax is relatively low. Still, inevitably it is going to be pushed down onto consumers, who in turn will be required to pay taxes on winnings come April (or October for extended filings). This is how the internationally-licensed long established online betting firms will look to compete, as they do not collect or report tax information to the IRS (nor do they require you to provide your social security number).
In New Jersey there will be an 8.5 percent tax to winning sports bets placed at brick-and-mortar locations, along with a 13 percent levy from winning bets made online.
West Virginia, next up to start launching sports books, they will be imposing a 10 percent tax.
"We think 8 percent is fair, we would have loved to collect 30 percent but we always have to keep in the back of our minds that there's a lot of competition out there," said New Jersey assemblyman Eric Houghtaling (D, Monmouth), a sponsor of the bill, in an interview with Forbes.
William Hill CEO Joe Asher told ESPN.com that the state could eventually handle approximately $10 billion in sports wagers. His company runs the sports book at Monmouth Racetrack.
Next store neighbor Pennsylvania will have a tough time competing with New Jersey's sports betting sector due to its substantial proposed taxing and licensing fees. Already they are having a difficult time attracting operators. They will be attaching a 34 percent tax on revenue, on top of a 2 percent local share. Initial licensing fees for sports book operators in the state could cost as much as $10 million.
- Gilbert Horowitz, Gambling911.com
