What is the tax for New Jersey Casinos?Land based casinos in Atlantic City pay: 9.75% in annual tax. Online NJ sites are subject to a 14.25% tax. We walk you through the taxation levels for online and land based casinos that are established in New Jersey.
Taxation for Casinos in New Jersey
In 2018, New Jersey Governor Phil Murphy approved a sports betting tax increase of 1.25%, which is solely for the use of tourism and marketing programs in Atlantic City. As a result, brick and mortar casinos are subject to 9.75% annual tax, which goes to the Casino Revenue Fund. (1)
For online casinos, the previous rate of 13% tax increases to 14.25%, including the alternative tax to develop tourism and marketing strategies for the city.
Throughout this article, you’ll learn more about the taxes casinos must pay to operate legally within the state, regardless of whether they are physical or online.
Fast Facts about Taxation for Offline & Online Casinos in NJ:
|Organisation regulating Atlantic City’s casinos:
|The Division of Gaming Enforcement and New Jersey Casino Control Commission
|Percentage on gross gaming revenue NJ casinos pay:
|8% tax on gross gaming revenue as per the Gaming and Atlantic City Taxes and Fees
|Percentage of the Community Investment Alternative tax:
|Community Investment Alternative tax is 1.25% of gross revenue.
Do offline casinos pay the same taxes as online casinos in NJ?
No, there is a difference in their gross gaming revenue. Offline casinos are subject to 8% tax, while online casinos pay 13% before adding the alternative investment tax.
When did offline and online casinos start paying taxes in NJ?
Physical casinos started paying taxes in 1978, while online casinos began in 2013.
Who regulates Atlantic City’s online and offline casinos?
Two bodies are in charge - the New Jersey Casino Control Commission (CCC) and the Division of Gaming Enforcement (DGE).
Do Casinos pay the same taxes for casino games as sports betting?
No, the sports betting tax is 8.5% for on-site and 13% for online wagering.
How Much Tax Do Offline & Online Casinos Pay in New Jersey?
According to the taxation figures released by the New Jersey Division of Gaming Enforcement, there is a significant difference in the amount of tax paid by online and offline casinos. We’ll delve into these details below, but we must remember that the figures provided are for 2019.
Taxation for Offline Casinos
From January 2019 until December, offline casinos paid $191,422 for the 8% gross revenue tax.
Since the start of physical casinos paying tax, they have paid a total of $ 9,875,950.
The 8.5% retail sports tax accounted for $4,695. Casinos paid $45,661 as part of their CRDA obligations.
Taxation for Online Casinos
In the same tax year, online casinos paid $72,474 for their internet gross revenue tax alongside the 13% internet sports tax, which produced $31,826.
From the inception of this internet gross revenue tax, online casinos have paid $225,842. (2)
What Taxes Do Online and Offline Casinos in NJ Have to Pay?
Offline casinos are subject to the gross revenue tax of 8%. For physical sportsbooks, they need to pay a retail sports tax of 8.5%.
Added to both these figures is the community investment alternative tax, which is earmarked to boost tourism and marketing for the city. This tax amounts to 1.25%.
Online casinos have a gross revenue tax of 13%, in addition to the community investment alternative tax of 1.25%.
Which are the Two Organizations Regulating NJ Casino Taxations?
Two bodies were created to combat crime and prevent criminals from capitalizing on the opportunities that gambling presented to them: the New Jersey Casino Control Commission and The New Jersey Division of Gaming Enforcement.
Atlantic City was facing an economic downturn, and one of the ways to fight back was to legalize casino gambling. The Casino Control Act passed in a 1976 referendum by the slimmest of margins to allow casinos to operate in the city.
These two bodies would be the sounding boards to keep all dealings legal and above board.
New Jersey Casino Control Commission
The commission is an independent licensing authority of New Jersey casinos and their employees. It exists as a judicial panel to conduct hearings on specific employee matters alongside appeals via the DGE. (3)
The efforts of this commission throughout the years have led to a situation where New Jersey casinos can operate legally, and the state’s citizens benefit from their presence.
Since its role is to create economic benefits for the Atlantic City region and the New Jersey state as a whole, it’s critical to enforce the proper taxation on casino providers.
The commission was also responsible for issuing licenses for casinos to operate. They would listen to cases from several casino brands about their intentions in Atlantic City. At the same time, the commission was focused on how to generate income to improve the city and state. (4)
Division of Gaming Enforcement
This body acts as a law enforcement agency and the investigative arm that supports the Casino Control Act. They are responsible for challenging applications for casino licenses and conducting reviews and audits of casinos’ operations, including ensuring that they adhere to the tax commitments.
Furthermore, they look into casino-related crimes and will conduct thorough tests of slot machines, casino systems, and online gaming systems before reaching the end user. (5)
The Division is also responsible for enforcing tax regulations on casinos within the state as laid out in the New Jersey Administrative Code under Chapter 13:69 L. (6)
How Often Do the Taxes for Online and Offline Casinos increase?
Sin taxes are always in line to increase by nature of their name. Both online and offline casinos in New Jersey can expect increases in their overall revenue tax.
Recent news out of New York shocked casino providers as the state decided to claim a whopping 51% tax.
That number pales in comparison to the 9.75% that casinos in New Jersey currently pay, along with 13% for online platforms. Casinos in New Jersey can count themselves lucky as they pay the lowest income tax compared to other states.
Pennsylvania demands 36% of the casino’s intake, and New Hampshire requires 51% of all gross gambling revenues.
The next tax increase may be on the horizon for New Jersey platforms, especially when the state realizes the numbers their neighbors are throwing around are at 51%.
Due to its tempered tax rates, New Jersey brought in $237 million from land-based casinos in 2015 alone.
The last thing they want is to push investors away and scare them off with tax hikes, even if the figures from other parts of the country dwarf that figure.
What Happens if a Casino Does Not Pay Their Taxes on Time?
According to State Tax Uniform Procedure Law, Section 9 of Title 54, interest will be calculated from the date the tax was originally due through the actual payment date.
However, if the deficiency is paid within 10 business days from the date of the Division's tax deficiency notice, interest shall be calculated through the date of such notice.
Takeaway on The Taxation for Online and Offline Casinos in NJ
Both online and offline casinos in the state of New Jersey must honor their tax commitments.
We’ve established that land-based casinos must pay 8% of their total revenue while online casinos are required to pay back 13% of theirs.
In addition, there is a 1.25% additional tax for the upliftment of the city and state.
When we compared these amounts to that of casinos in other states, it was clear that New Jersey casinos are paying far less than their counterparts in other states.
Even though the tax income figures are appealing elsewhere, there is a consensus to keep these taxes in check to avoid scaring casino investors away from the state.
If you are interested to know what type of tax actual players pay on their NJ casino winnings you can read our guide there.
Resources & Sources
- Sports Wagering FAQs, New Jersey Government, accessed July 1st 2022, <https://www.nj.gov/oag/ge/docs/SportsBetting/FAQs.pdf>
- Summary of Gaming and Atlantic City Taxes and Fees, New Jersey Division of Gaming Enforcement, accessed July 1st 2022, <https://www.state.nj.us/oag/ge/docs/Financials/QuarterlyFinRpt2019/ACSpecificTaxesandFees1978-2019.pdf>
- Overview, Casino Control Commission, accessed July 1st 2022, <https://www.state.nj.us/casinos/about/overview/>
- A Brief History of the Casino Control Commission, Casino Control Commission, accessed July 1st 2022, <https://www.state.nj.us/casinos/about/history/>
- Division of Gaming Enforcement, New Jersey Office of the Acting Attorney General, accessed July 1st 2022, <https://www.njoag.gov/about/divisions-and-offices/division-of-gaming-enforcement-home/>
- Regulations, Office of the Attorney General, accessed July 1st 2022, <https://www.nj.gov/oag/ge/regulations.html>