In the year 2020, New Jersey took in tax revenue of $302.7 million of $2.88 billion gross operating revenue through its brick-and-mortar and sports betting operations.
This may sound like a huge tax revenue from one state, but it isn’t bigger than Pennsylvania, which collected $1.1 billion in 2020. It earned good income from truck stop video gaming terminals.
One of the reasons behind this difference is that New Jersey has the lowest gaming tax rates compared to Pennsylvania, which has the highest gaming rate.
New Jersey is turning into the Next Nevada
Nevada is the heaven of casino gambling sports games. In fact, in 1978, many resorts in Atlantic City were the first legal casinos outside Nevada. Back then, the biggest question was how much to tax casinos in New Jersey. So state legislators recommended following Nevada’s low-tax lead.
However, according to Assemblyman Ralph Caputo, this was a mistake by the state, which cannot be changed now. Caputo was the state assemblyman from1968 to 1972 and later left politics to join as the casino executive of Atlantic City before returning to the General Assembly in 2008.
Caputo believes that the tax rate should be higher, but it wasn’t possible back then due to political hold.
Pennsylvania following its ideas
Pennsylvania is having a great time in different types of gambling. Casinos were introduced in the state during 2004 when the law was passed. Compared to New Jersey, Pennsylvania has a good start in the gambling industry. The state had also set a 54% tax rate on the slot machine.
Susan Hensel, the retiring Pennsylvania Gaming Control Board licensing director, said that the rate is a boon for state taxpayers. According to him, the model worked well in Pennsylvania. The primary goal is to assist the promotion of the horse racing industry, which will create jobs and raise tax revenue.
In 2017, Pennsylvania legalized online casino games, and now New Jersey has legalized the same.
New Jersey has set a 15% tax for the online casino, while Pennsylvania has developed the same rate as a land-based casino with 54% is for slots, and 16% is for table games. In New Jersey, the tax for brick-and-mortar sports like racetracks accounts for one-tenth of wagering 8.5%. Similarly, for mobile sports betting, the tax rate is 13%.