The Wagering Hits Keep Coming

^{Being a gambler in New Jersey is getting tougher, especially online. Is that how they expect to keep people at the land-based tables in Atlantic City? (Photo: Wayne Parry / AP)} 

TRENTON, New Jersey (Casinos.com) -- In what’s shaping up as a brutal week for bettors, ‘gambling-friendly’ New Jersey just got a lot less hospitable.

The new agreed-upon state budget raises the tax on both online casinos and sportsbooks from respectively 13% and 15% to 19.75% for both. Daily Fantasy Sports sites (DFS) got hit as well, as their taxes (technically “operating fees”) will also rise to 19.75% (from 10.5%). At least DFS remains legal here, not so much in California. In addition, sweepstakes casinos are now illegal in NJ.

I have begun to notice a trend. New Jersey is the 3rd state to raise online wagering taxes in 2025, following hikes in Michigan and Louisiana. Illinois bumped their sportsbook levy from 16% to 40% in 2024, and is adding a $0.25 surcharge to all sports bets in September 2025 for the first 20 million bets, and then $0.50 thereafter. This is all of course on top of the wagering carveout in the new budget bill. 

The good news I suppose is that the 19.75% rate represents a compromise of sorts. State Senator John McKeon proposed a 30% tax, and term-limited Governor Phil Murphy wanted a 25% tax. And even at this elevated rate, it's still far lower here than in New York. The Empire State charges a 51% tax on sports bets and does not have online casinos.  Pennsylvania charges 54% for online slots and 36% for online sports bets.

Bets and Taxes

The tax changes in New Jersey and nationally come amidst a year of mixed results and trends thus far. Total Gaming Revenue in 2025 through the end of May is up 6.6% vs. the first 5 months of 2024. But it's entirely thanks to online gaming, which has seen 22.5% growth YoY. 

The nine land-based casinos in New Jersey have seen just 0.8% growth in house YoY while sports wagering revenue has actually declined 10.3% YoY. On the bright side (for the industry) May was the first month in 2025 that saw a YoY lift in the overall Handle.

We all generally associate FanDuel and DraftKings with DFS and sports wagering, but they remain the largest and most profitable internet gaming sites in the state. FanDuel (affiliated with Golden Nugget Casino) has seen a 26% revenue jump YoY to $253.4 million, while DraftKings win popped 13.5% to $231.7 million. BetMGM and Borgata (both affiliated with Borgata Casino) round out the top 4 and saw growth of 36.7% and 20.4% respectively.

FanDuel and DraftKings do dominate the sports betting space, accounting for a little over 70% of NJ’s total revenue between them. FanDuel (affiliated with Meadowlands racetrack) has earned $186.5 million, a drop of 11.8% YoY, while DraftKings (paired with Resorts casino)sports revenue bucked the overall trend and actually rose 2.8% to $128.5 million.

Impact on Bettors

These taxes (other than the Illinois surcharge)  are borne by the casinos and sportsbooks. But of course, wagerers will ultimately pay. How?

Well, spreads will likely go up. Perhaps not on basic markets like an NFL game -- where we typically see -110 on either side before money flow starts moving lines. It's more likely the casinos and sportsbooks quietly widen spreads on props and reduce payouts in parlays first before touching their easier to spot spreads.

The industry may consolidate as well. The Garden State currently boasts a whopping 28 online casinos and 15 sportsbooks. But beyond the largest ones and fast growing Fanatics in the space, most struggle for visibility and relevance. Its tough to imagine that gets better with the coming revenue squeeze.

We can also anticipate less generous bonuses and welcome offers as competition dwindles. In all fairness though, this has trended down already amidst some serious market saturation. New Jersey has had legal online casinos since 2013 and sportsbooks since 2018.

I suppose the Sweepstakes casino ban will help on the margins. The new law significantly hampers these gray market sites as they can no longer offer “casino-style games such as slot machines, video poker, table games such as roulette, blackjack, craps, and poker; lottery games such as draw games, raffle, bingo, and keno; and sports wagering”. They can remain in business only if they do not cost money for players and only offer non cash prizes. 

About That New Law …

If you’ve been following industry news, the new budget reconciliation bill has a provision in it that could significantly impact the casino industry. Noted professional poker player Phil Galfond summarizes the devastation potential here.

Well, maybe there’s hope, however faint, that it goes away before it ever takes impact. Remember this starts with revenue earned in 2026, so there’s no effect on 2025 anyway. Gambling law expert Russ Fox had an X thread on the topic:

“This is likely to be (at least, here in Nevada) bipartisan;” Fox wrote. “I can't see any of our legislators, Republican or Democrat, liking this measure. Published reports suggest another reconciliation bill will occur this Fall.” 

He added: “That, or a ‘technical corrections’ bill (quite common with tax law--technical corrections bills are generally bipartisan), could be used as a vehicle to rescind this law and revert back to current IRC 165(d).”

So he’s saying there’s a chance! Well, he also says not a great chance, he later completely off the cuff assigns it about a 25% probability. At least there’s hope!