New Jersey Online Gambling Laws and Taxes 2024 — Full Overview

Writer: Patrik Lidin Principal Writer and Editor / Head of Content

Experience: Sports Trader, Market Maker, Product Owner Sportsbook, Professional Gambler, Poker Player

Updated: 1 month ago

Reviewed by:   Expert review board

Legal Status of Online Gambling in NJ — State-Level Laws and Regulations

New Jersey is at the forefront of the online gambling industry, legalizing online casinos in 2013 and opening the first legal sports betting sites in the United States in 2018. New Jersey has enacted all forms of online gambling, including casinos, sportsbooks, poker, daily fantasy sports, horse betting, bingo, and lottery sites. This makes online gambling accessible to New Jersey residents of legal age.

The only form of online gambling that New Jersey regulators are hands-off on is sweepstakes casinos, which are allowed under a federal legal framework. However, lawmakers will likely clamp down on social casinos in the near future with unique state-level laws.

Overview of Legal Requirements for Players (New Jersey Residents)

Depending on the form of online gambling you plan to engage with, the legal age for participating is between 18 and 21 years old:

• Online Casinos: Minimum 21 years old.
• Online Sportsbooks: Minimum 21 years old.
• Online Poker: Minimum 21 years old.
• Sweepstakes Casinos: Minimum 18 years old.
• Online Horse Race Betting: Minimum 18 years old (except for horse betting hosted by online sportsbooks where players must be at least 21 to register).
• Daily Fantasy Sports: Minimum 18 years old.
• Online Lottery: Minimum 18 years old.
• Online Bingo: Minimum 18 years old (except for horse betting hosted by online sportsbooks where players must be at least 21 to register).

Underage gambling is a severe breach of regulations, and all New Jersey gambling operators carry out verification procedures during registration of new accounts and then bolster their efforts to combat underage gambling and other illicit activities such as money laundering through Know Your Customer (KYC) processes.

When registering, you may have to use one of the following to prove your age and residence:

• NJ Driver’s License
• National ID Card issued by the State of New Jersey.
• US Passport
• SSN or TIN - valid taxpayer identification number(1)
• US military photo identification card - Common Access Card (CAC)(2)

Know Your Customer (KYC) Due Diligence

The KYC process at online gambling sites is crucial to regulatory compliance to help combat not just underage gambling but also to prevent:

• Identity theft
• Fraud
• Money laundering
• Terrorist financing
• Other illicit activities.

The due diligence carried out by online gambling operators during KYC processes can include the following three checks where your personal details used in the gambling site must match that of your official documentation:

• Proof of identity — scan or make a photocopy and upload either of the following documents:
  • NJ Driver’s License
  • National ID Card issued by the State of New Jersey.
  • US Passport
  • SSN OR ITIN - taxpayer identification number
  • US military photo identification card or Common Access Card

• Proof of residency — scan or make a photocopy and upload either of the following documents:
  • NJ Driver’s License
  • Property tax bills or letters from the IRS from last year.
  • An original lease or rental agreement in your and the landlord's names, including signatures.
  • Bank statements where your address and name are present will be accepted. “Neo bank” statements will not be accepted; it has to be a local brick-and-mortar bank.
  • Utility Bill (Gas, electricity, internet, etc.)
  • First-class mail from any government agency stating your name and address.

• Proving source of funds — scan or make a photocopy and upload either of the following documents:
  • A bank statement showing the funds in your bank account with an explanation of where the funds originate, such as an employer contract and a recent payslip.
  • Recent payslip from your employer.
  • Documentation regarding the sale of financial assets such as stocks or cryptocurrencies.

Geolocation Laws and Federal Prohibitions Relating to Location

Besides stating your location about gambling on New Jersey websites and apps, laws have been passed that require operators to use geolocation technology to verify your physical location(3). This means you must be physically present inside state borders to access and gamble for real money in licensed New Jersey gambling sites.

I strongly advise you not to use a VPN (Virtual Private Network) or proxy to bypass geolocation requirements since this endangers the gambling operators’ compliance with laws. All operators have stipulated in their terms of use that you cannot access and play using VPNs or proxies. If you do this and get caught, you risk account closure and losing your funds.

Additionally, although no one has been prosecuted for it, it’s an offense under federal gambling laws for persons physically located outside of New Jersey to access and gamble at New Jersey online gambling sites per 18 U.S.C. §§ 1084 et seq. (The Wire Act) and 31 U.S.C. §§ 3163 through 3167 (UIEGA).

Private Taxes On Gambling Winnings — Tax Rates Overview

NJ gambling taxes are straightforward; for most types of gambling, such as online casinos, winnings are subject to a federal gambling tax rate of 24% and treated as taxable income in New Jersey at a rate of 3% of the payout.

If you win bigger sums of money and hit a specific threshold, the gambling operator will issue a tax form called W-2G and send a copy to the IRS (Internal Revenue Service). The online gambling operator is required by law to issue copies of the W-2G if you hit any of the below tax thresholds for different types of gambling.

*Lottery winnings from $10,000 are subject to a 5% gambling tax, and lottery winnings exceeding $500,000 are subject to an 8% gambling tax.

How to Pay Taxes on Gambling Winnings in New Jersey

Declaring and paying taxes based on cash winnings are straightforward and subject to the tax rates in the table of the previous section. If you win prizes, such as a technical gadget, a car, or a vacation, you’re expected to pay taxes based on the fair market value of the prize, where the same tax rates apply.

Please beware that you pay taxes on the federal and state level:

• Federal Level Tax Filings: You must report gross winnings (you can deduct by itemizing the deductions).
• State-Level Tax Filings: You must report net gambling income and deduct losses.

As with the legal information on this page, if you need legal or tax advice, seek a professional advisor to help you with your specific situation. But in general, you can expect the following when paying NJ gambling taxes:

1. Ensure the Gambling Operator Has Your Information: Provide your ID and SSN to casinos and sportsbooks. This information is required for the W-9 form, which helps with tax withholding and necessary tax forms.
2. Determine IRS Payment Responsibility: For winnings over $5,000, the gambling retailer will typically withhold and pay the 24% federal tax to the IRS. Your main concern will be your income tax, factoring in your winnings. Keep track of all wins and losses for tax form completion.
3. Wait for Your W-2G Form: If your winnings qualify, wait for the W-2G form as proof of taxes paid. Use the W-2G form to help fill out your 1040 for tax returns. Contact your casino or payer immediately if you qualify but don’t receive a W-2G.
4. Fill Out Applicable Form 1040: Track wins and losses with W-2G and receipts (physical and digital). File your tax information under ‘other income’ on Form 1040 — Schedule 1. Make deductions using Form 1040 Schedule A(4). Use 1040-SR — Schedule 1 if over 65, and 1040-NR — Schedule 1 if not a US citizen or permanent resident. 
5. Complete NJ-Specific Forms: Use NJ1040 or NJ1040-NR (for non-residents) for NJ gambling winnings tax returns.

Example of Filing Tax Returns for Gambling Winnings on the State and Federal Level 

Say you placed one bet and won a 3-leg parlay with a $300 stake, resulting in a $3,200 return. In this case, you report gambling winnings as follows:

State-level Tax Return

Income derived from gambling is not subject to New Jersey gross income tax but is based on new winnings. Consider the following when calculating your New Jersey tax return:

• You write the net gambling winnings on line 24 of the NJ-1040 form: $2,900 ($3,200 minus $300).
• If you made more wagers in the year, say you lost another five parlays for a total loss of $1,500, you enter this amount on line 24 of the NJ-1040 form. This losing amount is deductible on your $2,900 win for a total net winnings of $1,400.

Federal-level Tax Return

Besides state taxes, you need to make a tax return for taxable income derived from gambling on the federal level, where you must disclose gross winnings:

• You write your gross winnings under “Other Earned Income” in the 1040 form;
• And ops for itemized deductions by complementing the 1040 form with Form 1040 Schedule A;
• In the same example, you record $2,900 in winnings in the 1040 form and only deduct $1,500 in losses by itemizing them, where you pay tax on the $1,400 you won in the year.

Again, consult a tax advisor if needed, especially if you have won substantial money.

Different Forms of Legal Online Gambling in New Jersey

Types of Gambling Products That Are Illegal in New Jersey

While all forms of conventional online gambling are legal in New Jersey, only games and services under the DGE, NJRC, Division of Consumer Affairs, and the New Jersey Division of State Lottery authorities and by local laws and regulations are legal. All offshore and crypto gambling sites are illegal.

On a side note, while crypto and offshore gambling sites are illegal, there are no laws prohibiting NJ residents from accessing, depositing, wagering, and withdrawing at these sites. However, the risks are greater when playing at illegal sites due to lower consumer safety and regular safety standards. There is also a higher risk of engaging with illicit operators with little to no intention of letting you withdraw funds from their site.

Latest Legal News and Updates for New Jersey — Bill Tracker NJ

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Overview of Legal Requirements and Taxes for Traditional Online Gambling Operators

New Jersey gambling laws include favorable provisions for online gambling and mobile betting, but operators are subject to licensing and rigorous compliance to operating in the Garden State.

No one can own or operate a gambling site (commercial gambling) without obtaining a DGE license for every eligible person per N.J. Rev. Stat. 5:12-82 (outlining who must be qualified and what persons are eligible and required for an application). All financial sources must qualify per N.J. Rev. Stat. 5:12-84b, and persons must be eligible under N.J. Rev. Stat. 5:12-85c.

All gambling equipment, such as databases and servers, must be physically located in an Atlantic City casino or casino-controlled data center per section 20 of P.L.2013, c.27 (C.5:12-95.22).

All casino games and wagering types offered by online gambling operators are subject to testing by the Testing Services Bureau (TSB), a subdivision within the DGE that tests and verifies the integrity of Internet gaming systems.

Gambling Operator Licensing and Fees

Land-based casinos in New Jersey can apply for iGaming permits and partner with gambling operators and software providers to offer online gambling products and services. Such licensing is subject to various fees(5) and varies depending on what type of gambling license the operator pursues:

Online Casino Licensing and Fees

• License applicants must pay a Nonrefundable Deposit of $200,000 for the application process.
• Upon approval, the applicant must pay an additional $200,000 Licensing Fee, for a total of $400,000.
• A Responsible Internet Gaming Fee of $250,000.
• Then, there is an Annual Renewal Fee of $250,000.

Online Sportsbooks Licensing and Fees

• Applicants must pay a Sports Wagering License fee of $100,000.
• An Annual Renewal Fee of a minimum of $100,000.
• Additionally, pari-mutuel and casino sports wagering license applicants must pay a $250,000 retainer to the Casino Control Fund to cover sports pool and online sports pool operations (Any year-end surplus stemming from this retainer in the Casino Control Fund is credited towards future licensing fees).

Daily Fantasy Sports Licensing and Fees

• License applicants must pay an Application Fee of $500(6).
• Fantasy sports operators with gross revenue above $49,999 must pay a Permit Fee of $5,000.
• Fantasy sports operators with gross revenue between $50,000 to $99,000 must pay a Permit Fee of $10,000.
• Fantasy sports operators with gross revenue between $100,000 to $250,000 must pay a Permit Fee of $20,000.
• Fantasy sports operators with gross revenue over $250,000 must pay a Permit Fee of $50,000.

iGaming Software Supplier Licensing

Specific provisions apply to third parties that supply goods and services related to gambling operators' operations, which require gambling-related casino service industry enterprises (CSIE) licenses. Examples of such third-party suppliers include live dealer games, payment processing, and general gaming equipment. The licensing fee for a CSIE license is $5,000.

Online Lottery Courier Services

Online lottery couriers fulfil lottery ticket orders on behalf of the New Jersey State Lottery and are subject to specific regulations and licensing requirements. Since lottery courier operators are mediators between NJ residents and the State Lottery, the licensing requirements and fees are less harsh than other gambling forms. Regardless, lottery couriers must obtain a Lottery Courier Service License following New Jersey Administrative Code Title 17, Chapter 20(7).

Gambling Operator Taxes

Besides combating illegal gambling, the legalization of online gambling in New Jersey has contributed significantly to the economy thanks to taxes. Taxes are based on gross gaming revenue (GGR), and the effective tax rate for gambling operators is:

• Internet Gaming: 15%
• Internet Sports Wagering (including racetrack online sports pool operations): 14.25%
• Daily Fantasy Sports (doubles as an operational fee)(8)*: 10.5%

In early 2024, NJ senator John Mckeon introduced a bill that proposed increasing the tax on online gambling and sports betting to 30%. You can follow the progress of this bill in our bill tracker, which tracks all legislative gambling bills in New Jersey.

In addition, licensed casino operators must pay an Investment Alternative Tax of 5% of their gross revenue or 2.5% of gross revenues in bonds issued by the Casino Reinvestment Development Authority (CRDA). The CRDA use the funds generated by gambling operators to facilitate economic and community development in Atlantic City.

*Based on gross revenue, such as entry and management fees, and not regular gross gaming revenue.

Laws Concerning Gambling Advertisements

Gambling advertisements in New Jersey are permitted online and offline through different mediums, including television and magazines, and in connection to events. All gambling ads must conform to the Casino Control Act and the Division of Gaming Enforcement’s regulations per N.J.A.C. § 13:69C-14.2(d)(9). The DGE is tasked with ensuring compliance and enforcement.

Some general rules apply to all forms of gambling ads, and the DGE has set forth a set of best practices relating to internet gaming and sports betting ads:

• It must include a responsible gambling message containing the phrase, “If you or someone you know has a gambling problem and wants help call 1-800-GAMBLER.”
• It must be truthful.
• It cannot be deceptive or misleading.

Overview of Legal Requirements for iGaming Affiliate Marketing

Affiliates can be compensated by simply directing traffic to a gambling site but must obtain appropriate licensing to do so legally. There are two types of licenses available to affiliate marketing companies. The applicability of these licenses depends on the method by which the affiliate is compensated(10):

iGaming Affiliate Sub-licensing in New Jersey

Additionally, two different types of affiliates can apply for an Ancillary CSIE License or Vendor registration:

1. Master Affiliate
2. Sub-affiliate

Sub-affiliates can piggyback on Master Affiliates if the Master has tied partnerships with many operators and the sub-affiliate struggles to create new partnerships. However, if the Master Affiliate does revenue share with operators and uses an Ancillary CSIE license, the sub-affiliate must also have an Ancillary CSIE license. The same is valid for vendor registration; if the Master Affiliate is compensated on a fixed fee basis, the Master and the Sub-affiliate must have a vendor registration with the NJ DGE.

Refer-a-friend Schemes — No License Required Up To $2,500

Many New Jersey gambling sites have so-called refer-a-friend schemes, where you can recruit new users to the gambling platform and earn a commission. The commission structure may vary depending on the gambling operator, but it’s usually a flat fee per referral. The good news is that anyone can do this starting today and earn up to $2,500 in a calendar year without applying for an affiliate license.

Impact of Regulated Online Gambling in the State of New Jersey

Lifetime Revenue Generated From Regulated Online Casinos and Sportsbooks

The revenue number quoted here is based on revenue generated from regulated online gambling until Q2 2024.

• Online Casinos since 2013: $8.37 billion
• Online Sports Wagering since 2018: $3.81 billion

Without taxes, of which internet gaming has become a significant contributor in recent years, it would be impossible to pay for the state’s health, welfare, social services, transport systems, roads, schools and universities.

New Jersey Lottery Supporting the Public-employee Pension System

The Lottery Enterprise Contribution Act was enacted in 2017 and stipulates that a percentage of lottery profits help support public-employee pension systems(11), helping protect close to one million state employees and retirees through three different funds:

1. Teacher’s Pension and Annuity Fund
2. Public Employees’ Retirement System
3. Police and Firemen’s Retirement Systems

The act will run for 30 years, starting in 2017. It will help fund the above pension systems based on the projected net earnings from the Lottery Enterprise, which should total around $37 billion during the period. As of 2022, the New Jersey Lottery had already contributed $1.074 billion to support the pension systems.

Problem Gambling

Not everything is butterflies and rainbows; online gambling also has a downside in that it can lead to problem gambling, which turns into social issues harming both individuals and our society. Some critics estimate that the costs associated with problem gambling could equal revenues generated from taxes and iGaming fees. These costs relate to healthcare, welfare, homelessness and criminality stemming from online gambling.

The accessibility of reliable records makes it hard to verify these claims. Still, critics argue that the government could enjoy greater results with a lower risk of social problems if they were to devote time and resources to other sections rather than internet gaming.

While no one should downplay problem gambling, what many proponents of legalized online gambling fail to understand is that there are illegal alternatives readily available to New Jersey residents. Offshore and crypto gambling sites are a Google search away, and there are no laws prohibiting residents from using these sites. Already today, these illegal alternatives generate hundreds of millions in revenue from US players, income that is taxed in other countries and removes incentives for additional hiring of NJ iGaming personnel at legal gambling operators, effectively taking away job opportunities and increasing unemployment rates locally. 

What’s worse, consumer protection is much worse at illegal gambling sites, leaving players vulnerable and at a higher risk of developing gambling problems. Arguably, without regulated online gambling, tax allocation and responsible gambling funds, the social issues would mount, and funds to combat social issues would have to be allocated from other sources. At least, with today’s legal situation of online gambling in New Jersey, the industry and its stakeholders can shoulder the responsibility and provide safer alternatives to online gambling and help combat the social issues together with politicians who are constantly revising and amending legislation to make it safer.

Laws About Responsible Gambling and Player Protection

Online gambling operators are subject to several responsible gambling procedures, including employee training and RG certification about assessing gambling habits, providing safe gameplay, advertising according to standards, and integrating into New Jersey’s self-exclusion program. Operators achieve compliance through different procedures, systems and tools(12):

• 13:69O 1.2(b): The message “If you or someone you know has a gambling problem and wants help, call 1-800-Gambler” must be on the login and log-off screens.
• 13:69O 1.2(d): If a patron has suspended their account, the casino cannot send gaming-related e-mail while the account is suspended.
• 13:69O 1.2(l)14: The following must be on a patron protection page: password help, filing complaints with the licensee and the DGE, a way to obtain a copy of the terms and conditions, a way to get an account and game history, underage gambling is a criminal offense notification, patrons must enable auto-lock features notification, notification that a patron cannot let anyone else access their account, federal law notification, mobile gaming exiting the property boundaries terminates the connection notification.
• 13:69O 1.2(t): Gaming systems cannot prompt you to continue playing when you are playing, trying to log off, or win or lose a bet.
• 13:69O 1.2(u): You will be able to access the player protection page at all times.
• 13:69O 1.2(z): Each gaming site should display specific Responsible Gaming logos and information. You will always be able to get to the responsible gaming page. This page requires a specific 1-800-Gambler message, a direct link to the Council on Compulsive Gambling New Jersey, Inc., RG policy and commitment from the operator, RG information and tips, and the rules of self-imposed responsible gaming limits, and how to enable them.
• 13:69O 1.3(n): There will always be a prominent way for you to close your account and be refunded any balance.
• 13:69O-1.4(j): The gaming system can suspend your account when you request it, DGE requires it, you are a prohibited person, or there is evidence of illegal activity, negative account balance, too many failed ACH deposit attempts or a violation of the terms of service.
• 13:69O-1.4(n): Gaming systems will allow you to self-impose a deposit, spend, and time-based limit.
• 13:69O 1.4(u): When your lifetime deposits exceed $2,500, you cannot wager until acknowledged: you hit the deposit threshold of $2,500, you can self-impose responsible gaming limits or close your account, and you are aware of the 1-800-GAMBLER services.

FAQ New Jersey Online Gambling Laws and Regulations

What Agencies Regulate Gambling in New Jersey?

• The Division of Gaming Enforcement (DGE) regulates online gambling in New Jersey, and together with the Casino Control Commission (CCC), they regulate land-based gambling.
• The New Jersey Racing Commission regulates horse race betting.
• The New Jersey Division of State Lottery regulates lotteries.
• The Fantasy Sports Unit of the New Jersey Division of Consumer Affairs regulates Daily Fantasy Sports.
• The Legalized Games of Chance Control Commission regulates small games of chance.

What Happens If I Don’t Pay Taxes on Gambling Winnings?

It’s advised to always declare and pay taxes according to the laws, and you are legally obligated to report any income you gain from gambling online (casinos, sports wagering, poker, bingo, keno, lotteries, and DFS). If you don't, you risk paying penalties, fines, original taxes, and interest payments.

If you hit the tax threshold for W-2G, the IRS will automatically inform you about your obligations and send a copy to the IRS.

Resources and Sources

1. Information regarding Taxpayer Identification Numbers (TIN), accessed June 26, 2024, <https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin>
2. Information regarding Common Access Card (CAC), accessed June 26, 2024, <https://www.cac.mil/common-access-card/>
3. Chapter 69O Internet and Mobile Gaming, accessed on June 24, 2024,  <https://www.nj.gov/lps/ge/docs/Regulations/CHAPTER69O.pdf>
4. Tax credits and deductions for individuals, accessed on June 24, 2024, <https://www.irs.gov/credits-and-deductions-for-individuals>
5. 13:69A-9.4 Licensing Fees, accessed on June 27, 2024, <https://www.nj.gov/lps/ge/docs/SportsBetting/SportsWageringEmergencyRegulations.pdf>
6. Licensing and Permit Fees for Daily Fantasy Sports Operators, accessed on June 27, 2024, <https://www.njconsumeraffairs.gov/regulations/Chapter-45A-Subchapter-36-Fantasy-Sports-Operators.pdf>
7. Rules of the Lottery Commission for Lottery Couriers, accessed on June 27, 2024, <https://njs-cdn.lotteryservices.com/content/dam/portal/pdfs/about_us/comission_legislation/NJAC_Title17_Chapter20_Effective_8-6-2018.pdf>
8. 10.5% tax rate based on quarterly GGR from Fantasy Sports, accessed on June 28, 2024, <https://www.njconsumeraffairs.gov/FSU/Applications/Fantasy-Sports-Operations-Fee.pdf>
9. Subchapter 14. Advertising, 13:69c-14.1 Applicability of advertising rules, accessed on June 24, <https://www.nj.gov/lps/ge/docs/Regulations/CHAPTER69C.pdf>
10. Director's Advisory Bulletin regarding Licensing of Internet Marketing Companies, accessed on June 20, <https://www.nj.gov/oag/ge/docs/Bulletins/LicensingofIMarketingCompanies.pdf>
11. Why the The Lottery Enterprise Contribution Act is important, accessed on June 22, 2024, <https://www.nj.gov/treasury/assets/docs/lottery/Lottery-Pension%20op-ed.pdf>
12. General responsible gambling information, accessed June 21, 2024, <https://www.njoag.gov/about/divisions-and-offices/division-of-gaming-enforcement-home/responsible-gaming-main/>