Opposition To New Jersey Gambling Tax Hike Proposal Already Mobilizing

While there are a number of politics-related reasons to believe that New Jersey Gov. Phil Murphy’s desire announced on Tuesday to have the mobile sports betting and iGaming taxes nearly doubled to 25% will be accepted by state lawmakers, that doesn’t mean there won’t be significant pushback.

An early key notice of that was a joint statement released late Tuesday afternoon by a pair of South Jersey legislators: Democratic state Sen. John Burzichelli and Republican state Sen. Michael Testa, Jr.

“Doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk,” they asserted. “A tax increase would negatively impact jobs, industry investment, and our New Jersey customers, and it could affect future revenue growth for the state.

“This is just the beginning of the process, and we will work with the [Assembly] speaker, Senate president, and governor to determine the best path forward for both the state and the industry.”

Four months to work with

The governor and the legislature must meet a June 30 deadline to settle on an entire budget, and other issues undoubtedly will be negotiated more extensively in the coming months.

But the 70-year-old Burzichelli served 20 years in the Assembly before being elected to the Senate last fall and spent 15 years of those years as the deputy speaker in the Assembly. He is well-known in the statehouse for his expertise on gambling-related issues such as his successful push for the legalization of New Jersey online casino gaming back in 2013.

The overwhelming 52-28 margin Democrats enjoy in the Assembly figures to make the Senate the main source of resistance. The latter 25-15 Democratic edge could fade quickly if Burzichelli can persuade several fellow Democrats to join his cause.

Testa, meanwhile, could stress a traditional conservative principle of opposing tax hikes, in this case potentially producing a net loss to the South Jersey economy, which was in shambles a decade ago when five of Atlantic City’s 12 casinos shuttered amid increasing competition from Pennsylvania and New York-based rivals.

The low tax rates on online gambling in New Jersey also have encouraged the arrival of thousands of industry jobs, mostly in the Atlantic City area or near Manhattan. If it seems plausible that a significant number of jobs could be lost in each region, that could boost bipartisan support from legislators representing those areas.

Even if the opposition coalition is not completely successful, it’s possible that a bit of statehouse “horse trading” could take place before the mid-year deadline to reset the gaming taxes — currently at 13% for mobile sports betting and 15% for iGaming — to a compromise number of something like 20%. That could benefit the gaming industry’s fortunes nationwide, given New Jersey’s pioneering role over the years.

FanDuel, AC casinos, others girding up for a fight

Around 10 a.m. on Wednesday — less than 24 hours after the governor’s announcement — online gambling industry giant FanDuel alerted its New Jersey customers of the news in an email:

“We NEED your HELP! New Jersey just announced a tax hike on online betting — both sports betting and iGaming. If approved, it would result in a nearly 100% tax increase! With massive, unfair tax hikes like this, everyone loses.

“Why does it matter? A tax hike will have a MAJOR impact on your favorite online games, putting promotional offers and the best odds at risk.

“Click ‘TAKE ACTION!’ to send a personal message to your representatives in Trenton to SAY NO TO AN UNFAIR TAX HIKE!“

At about 4:30 p.m. Wednesday, BetMGM sent its New Jersey customers an email with the same call to action and almost the exact same wording as FanDuel’s alert.

Gambling industry lobbyist Bill Pascrell III, one of the state’s leading experts on Trenton statehouse politics and the son of a former member of Congress, told Casino Reports on Wednesday that “this [tax hike] by no means is a done deal.”

“It not only is a bad idea, because it is liable to lead customers to bet [illegally] elsewhere, but New Jersey is known as the platform standard for a gambling regulatory regime,” Pascrell added. “If New Jersey does this easily, it’s also liable to happen in other states.”

That’s why Pascrell expects other major sportsbooks and iGaming operators to reach out to their customers in New Jersey just as FanDuel already has.

Casino Association of New Jersey President Mark Giannantonio called the tax hike proposal “ill-advised and, if passed, will have significant adverse consequences for brick-and-mortar casinos.

“The partnerships between online gaming companies and Atlantic City casinos have established significant cross-marketing and promotions, such as complimentary rooms, entertainment, and promotional gaming credits for use at the properties to help bring more visitors to Atlantic City.

“More importantly, the financial benefits of these partnerships provide additional resources that are reinvested in our brick-and-mortar Atlantic City properties, support our operations, and augment our ability to compete in the regional marketplace more effectively. 

“These are very challenging times for the Atlantic City casino industry and its employees. As a destination resort, Atlantic City has still not recovered from the COVID-19 pandemic — six of nine casinos have not returned to pre-pandemic gaming levels.”

Chamber of Commerce Southern New Jersey President Christina Renna expressed similar concerns.

“The increased tax on sports betting from 13 percent to 25 percent is particularly alarming for South Jersey, which has become a hub for the gaming and tourism industry,” Renna said. “Atlantic City has particularly benefited from this new industry, and any additional taxation risks reduction of consumer participation, impacting local businesses, and threatening jobs in an industry that is still recovering from the challenges of recent years.”