On February 26, 2013, New Jersey Governor Chris Christie signed legislation that opened the door to Internet gaming. Under this original law, authorization for the activity was due to expire in November 2023. However, Governor Phil Murphy signed a new law authorizing the continuance of Internet gaming for a further five years.
This is half the originally planned ten-year expansion for online casino gaming sites but longer than the short two-year extension that could have happened. This two-year proposal followed a discussion about the original 10-year suggestion. When New Jersey lawmakers broached an extension of two years, they faced fierce opposition.
Casino operators, their political supporters, and South Jersey business leaders pointed out that the online gaming industry is a big money earner for New Jersey. In fact, the state brings in more money from the industry than any of the other states that offer online casino gaming. In addition, the industry creates jobs and provides valuable tax revenue for the state.
The New Jersey Division of Gaming Enforcement reported $531.6 million in gaming revenue for August 2023 in the state. This figure was enhanced by significant year-on-year growth in online casino gaming and sports betting. Internet casino revenue was $155.3 million for the month, a jump of 18.1% from 2022. The taxation raised from this revenue was $23.2 million. This figure amounted to the largest proportion of overall state gambling revenue taxation for August of $53.4 million.
These taxation figures account for a variety of taxes collected from all New Jersey online casinos and Internet gambling. Looking specifically at online gambling, it’s taxed at a rate of 17.5%. 15% of this is a state gaming tax, and 2.5% is a community investment allocation. Since 2013, the state gaming tax element has been allocated to the Casino Revenue Fund, which funds a variety of programs in the state aimed at helping seniors and people with disabilities. In 2022, New Jersey casinos contributed more than $249.4 million in taxes to the fund.
Interested parties protesting the proposed two-year extension to the authorization of online gaming in New Jersey referred to these high revenue and taxation figures. They argued that such a short extension would damage the future of the industry and threaten the taxation that is so vital to funding valuable programs.
As a result of these arguments, the extension was set at the five years that has been signed into law. This may not be the ten years that was first suggested, but it’s still more positive than a short two-year extension that could have dissuaded people from investing in the industry. The setting of the five years means the online gaming industry in New Jersey can continue to grow and flourish as there is certainty and security for the immediate future.
What happens at the end of the five years is uncertain. However, if the industry continues to produce substantial revenue and tax returns, lawmakers are likely to continue renewing authorization.
