There are many aspects to measure just how successful is NJ sports betting. Whether you are looking at it from NJ sportsbooks and their revenue, players and their winnings or the state of New Jersey and the taxes.
When legal sports betting became a reality in New Jersey on June 14, one of the arguments for it was how much the state stands to profit from the taxes sportsbooks would pay. A quarter into the new fiscal year of 2019, those estimates ring more than true. Since its launch date, the NJ sports betting market has generated $4.15 million in taxes.
According to William Skaggs, the spokesman for the NJ Department of Treasury, the projected taxes should total at $25 million by the end of the fiscal year. And with three more major sporting events on the horizon – March Madness, the NFL postseason and the Super Bowl, the goal seems more and more realistic.
Given these projections, passing the $4 million threshold this early into the market’s development is great news for the state.
NJ Sportsbook Are Setting The Bar
Every state across, the country has its eye on NJ sports betting, and for good reason. It’s the first high-profile state to introduce betting following the repeal of PASPA earlier this year. As such, the benefits and detriments of NJ sportsbooks’ activity may serve as the final verdict for many other states on the verge of legalisation.
In New Jersey, there’s two types of tax rates on sports betting. Bets at retail locations like an Atlantic City casino or a racetrack are taxed at 8.5 percent. Online bets, on the other hand, are taxed at 13 percent.
Right now, New Jersey seems to be the golden mean in terms of sports betting tax rates. Pennsylvania has decided to impose a 36 percent tax rate on sports betting, as they set to fully launch by the end of the year. However, Nevada has only a 6.25% tax.
Taxes generated from sportsbooks are collected at a Casino Revenue Fund, which in turn pays for various social programs for senior and disabled citizens. This includes property tax reductions, rent assistance, utility relief, transportation assistance and, naturally, health services.
The good news about the tax system in New Jersey is that it’s designed to target larger profits from online gaming and betting, which has surpassed land-based gaming in popularity. The more NJ sportsbooks expand their online operations (which seems to be the trend), the more it benefits state tax revenue.
NJ Sports Betting Taxes Could Take On More Change
Starting in December, a bill that increases online NJ sports betting and AC casino taxes by 1.25% will come into effect. The additional taxes will go to the Casino Reinvestment Development Authority (CRDA), which finances redevelopment projects in Atlantic City.
Part of the CRDA’s mission is to improve “marketing and promotion,” following criticism about how the institution is handling the development of the city. There’s good reason to believe it was exactly this report that led to the additional 1.25% on top of taxes.
The director of communications in the CRDA, Larry Sieg, referred to the new funding as the much needed ingredient in the promotion of Atlantic City. He hopes to help turn the city into a world-class vacation destination. What’s more, the CRDA has an objective to move the management of the city back to the hands of local officials.
There’s still a long road ahead of Atlantic City if officials want to disprove the city as a credit risk, despite its recent credit reports coming out with a four spot improvement in its credit rating.