New Jersey Lawmakers Appear Indecisive Over iGaming Extension

Future of NJ iGaming Market Up in the Air

Since 2013, New Jersey has offered an extensive iGaming market. The state legalized online casinos and poker at the time, with top-rated operators offering services to visitors and residents. The law legalizing iGaming was enacted for ten years, with November 2023 being the deadline for action. Lawmakers have been busy deciding how to extend the industry, with ideas all over the place.

The initial idea was to renew the industry for two years. Of course, this caused outrage among operators and forced lawmakers to reconsider. Now, it seems the goal is to renew online gaming for five years before reconsidering legislation yet again.

Cutting the Extension in Half

Because the law gave online casinos ten years of legalized services, the legislation was expected to be renewed for an additional ten years, no questions asked. Yet, that is not the case. The original bill to reauthorize online betting was set to offer a ten-year time frame but was suddenly cut down to two.

Casinos, businesses, and shareholders immediately fought back and called for lawmakers to add more time. Now, the measure has been amended and will extend iGaming for five years. There is no explanation for why lawmakers are not moving ahead with a longer extension and why the short two-year time frame was even a consideration.

The iGaming industry in New Jersey is one of the largest in the United States and an example for other states. It makes perfect sense to renew the law for a longer term to continue with the same momentum the industry has enjoyed over the past decade. Some feel that a raise in taxes may be under consideration, so the state chooses to only renew for five years.

Is a Tax Increase Coming?

Casino operators and political officials have speculated that the lesser renewal period could be based on taxes. Lawmakers would have leverage over the industry the next time the legislation needs to be updated and could call for higher tax payments.

Presently, in-person gaming provides 8% to the state. Online sports betting is 13%, and online gambling is 15%. These rates are relatively low, especially if you consider neighboring states. Pennsylvania, for example, has much higher taxes.

Online casino operators in PA must pay 16% on online non-peer-to-peer table games and a whopping 54% on online slots. Sports betting is taxed at 36%. With New Jersey having such low rates, the lawmakers could require changes for higher payments to the state to renew the iGaming legislation once again; at least, that is what some operators think could happen.

Harming Potential NJ Investments

Don Guardian, the former Atlantic City mayor and Republican Assemblyman, pointed out that a shorter time frame would devastate the industry as it relies on investments. Only a handful of states currently offer online gaming in the US, and NJ has the largest market, bringing in more money than any other state.

Mr. Guardian feels that companies will not be willing to invest in the sector if limited to two more years. Even five years may cause companies to pull back in offering iGaming. Atlantic City has stayed afloat thanks to online gaming, especially during the COVID-19 pandemic. The online sites could continue offering services while the land-based casinos were shut down.

Since launching in November 2013, the online gaming sites of NJ have brought in over $6 billion in revenues. This is only casino gaming and does not include sports betting totals. The massive industry is at risk if lawmakers do not consider extending the legislation for a longer time frame.

It will be interesting to see if any change will be made to the legislation or if the five-year time limit will stand. Operators will surely fight for more time, so they can continue to invest and bring in much-needed revenues to the state.