However, it has been met with opposition and there are concerns about the impact on consumers and industry stakeholders.

Gov. Murphy’s Budget Proposal

The budget plan was presented on February 25, 2025, and outlines a record of $58.1 billion in state expenditures. To support this spending, Gov. Murphy proposes $1.2 billion in new taxes, with online gambling and sports betting as two of the targeted sectors.

The proposed tax rate increase to 25% is set to contribute an additional $402.4 million in revenue for the state, which will be attributed to areas like pension payments and property tax relief.

Other tax increases proposed by the Governor also include increasing property sales taxes from 1% to 2-3% (depending on property value), excise taxes on cigarettes, e-cigarettes, and alcohol, and raising fees to receive a firearm purchases ID card.

Response From Industry

Understandably, the tax hikes have sparked outrage from casino operators and other stakeholders. The Casino Association of New Jersey (CANJ), which represents the nine casinos in Atlantic City, expressed concerns about the negative impacts on both online and physical casino operations.

Mark Giannantonio, president of CANJ, said of the proposal: “The proposal is 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… to help bring more visitors to Atlantic City.”

He continued to claim that the increased tax rate would disrupt these partnerships, decreasing the revenue and visitors of physical casinos.

Potential Impact On Consumers

New Jersey is one of only a handful of states where online gambling is legalized and regulated. Residents in other states frequently use virtual private networks (VPNs)  to access legal gambling platforms outside of their states’ jurisdictions. VPN-friendly casinos.

However, higher tax rates will have a trickle-down effect on all online casino users, whether compatible with VPNs to be accessed outside of New Jersey or not. Operators will have to adjust business models to remain profitable, which may result in less favorable odds, reduced bonuses, and fewer promotions.

There are also concerns that costs will be placed on the consumers, making regulated platforms less competitive. Should this scenario be realized, players may seek out offshore or unregulated platforms using a VPN, reducing state revenue.

Comparative Tax Landscapes

New Jersey’s current 15% tax rate on iGaming is competitive compared to other states with legalized online gambling platforms. For example, Pennsylvania imposes a 54% tax on online slot revenues; New Jersey’s rates are clearly more attractive to operators. In Nevada, online platforms are only taxed at 6.75%, whereas Delaware imposes a 50% tax rate.

New Jersey’s increase to 25% will narrow this gap between states with higher tax rates, influencing the operators’ decisions as well as market conditions.

Legislative Process Going Forward

The budget proposal will move to the state legislature, where it will likely undergo revisions. Lawmakers will have to decide by the June 30 deadline to finalize the budget for fiscal year 2026.

Considering the mixed reactions from stakeholders as well as the concerns about the proposal’s economic impact, it is likely that iGaming tax rates will be the main focus of legal discussions. Considerations will have to be given to balancing New Jersey’s revenue with the competitiveness of its thriving gambling industry.

Final Thoughts

Gov. Murphy’s proposal to increase iGaming tax rates will likely have significant implications for the industry as well as consumers. Additional state revenue can be used to support public programs, but the impact on the gambling industry should be weighed up against the benefits of increased revenue.

As the legislative process moves along, stakeholders and lawmakers will have to determine how to achieve fiscal goals without adversely impacting New Jersey’s online gaming sector.