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New Jersey Gov. Phil Murphy has proposed an increase from 13 percent to 25 percent on sports betting and online casinos.
Operators claim the tax hike could translate into lower odds for gamblers. This typically means reduced promo offers and less competitive odds.
FanDuel said in a recent statement: "A tax hike will have a major impact on your favorite online games, putting promotional offers and the best odds at risk."
The efforts to increase taxation on operators is bipartisan.
Senators John Burzichelli (D) and Mike Testa (R) issued a rare joint statement condemning the tax hike.
“Simply put, doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk,” the statement said.
The two senators also explained the tax increase “would negatively impact jobs, industry investment,” as well as New Jersey customers, while possibly affecting “future revenue growth for the state”.
Legal Sports Report's Pat Evans notes that an analysis from Truist Securities suggests that the proposal will be negative for gaming stocks across the board. The report also highlighted how the proposed rate should have been higher, noting neighboring New York’s 51% rate. Pennsylvania's rate is 36% on their gross gaming revenue.
And while market leaders like FanDuel and DraftKings are best positioned to weather the increases, others may have no other choice but to exit the New Jersey market.
Thirteen sportsbook and online casino companies are currently licensed to operate in the Garden State. These include BetMGM, Fanatics, Bet365, FanDuel, Caesars, DraftKings, BetRivers, Hard Rock Bet, Borgata, ESPN Bet, BetParx, Golden Nugget and Prime Sportsbook.
NJ regulators are also fighting back against prediction market sites like Kalshi and sweepstakes casinos they claim are not licensed to operate in the Garden State. None of these companies are subject to the state gaming tax.
On Thursday, The Assembly Tourism, Gaming and the Arts Committee voted to ban sweepstakes casinos.
Eric Shuffler, who represents the Sports Betting Alliance and whose members include online gaming entities like Fanatics, DraftKings, and BetMGM, testified sweepstakes casinos are a severe threat to the regulated gambling infrastructure.
While New Jersey's cease and desist letters in the past have mostly been successful in keeping offshore websites from allowing residents to register accounts, the state has had little luck in preventing Kalshi from operating.
The New Jersey federal court sided with Kalshi over prediction market contracts late last month.
Kalshi secured a preliminary injunction against the New Jersey Division of Gaming Enforcement preventing the state from enforcing a cease-and-desist order that aimed to halt Kalshi's operations within New Jersey.
From Holland & Knight:
On April 28, 2025, the court found that Kalshi raised serious constitutional questions and demonstrated a likelihood of success and irreparable harm absent judicial intervention, and it enjoined the Division "from pursuing civil or criminal enforcement actions against Kalshi concerning its sports-related event contracts."
Notably, the court emphasized the tension between the state's interpretation of gambling laws and Kalshi's operation under federal regulatory approval. The court did, however, impose a $100,000 bond that was "intended to mirror that of the maximum fine of a violation [the Division could impose] under the New Jersey Sports Wagering Act."
Though the ruling does not resolve the underlying legal issues, it marks yet another development for Kalshi and could serve as precedent for other federally regulated platforms confronting similar scrutiny.
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