Sportsbook in New Jersey Facing Closure Due to Rise in Tax Levies
New Jersey, a leading state in the US sports betting market, has seen a significant increase in the online sports betting tax rate to 19.75%. This move, while aiming to boost state revenues, may hint at instability for some sportsbooks.
Michael Molter, a sports betting analyst, closely follows the impact of this tax hike on legal sports betting bills, sports betting revenue data, tennis betting odds, and sportsbook reviews. According to Molter, the low-performing licenses in New Jersey should be closely watched, as the first major casualty of the 19.75% tax era may soon occur.
The increased tax rate may force legal sports betting sites to reassess the cost of staying competitive. Operators in Maryland, Illinois, Ohio, and Louisiana are also raising their tax rates, adding to the pressure.
Some sportsbooks, like Monmouth Park, with a year-to-date online revenue of $6.3 million, may find it challenging under a significantly higher tax burden. However, no New Jersey sportsbooks are currently reported to be at direct risk of closure specifically due to the increased online gambling tax rate.
The question of which sportsbook will pull the plug next remains unanswered. Regulatory changes, such as the proposed ban on microbetting, could financially impact sportsbooks offering these bets, as violations could incur fines of $500 to $1,000 per incident.
Assembly Bill A5971, introduced by Assemblyman Dan Hutchison, aims to ban microbets to reduce impulsive gambling. Sportsbooks offering microbets could face monetary fines but not mandatory closure at this stage.
Despite these challenges, major operators like DraftKings have minimized the risk of closure from such a ban, stating that microbetting constitutes only a small share (single-digit percentages) of their betting handle and is unlikely to be considered a major threat.
The high cost of doing business in New Jersey is another concern for sportsbooks. Joe Brennan Jr., a prominent figure in the industry, cites this as a reason for sportsbooks to consider leaving. Caesars Atlantic City and Ocean Casino, tied to low-revenue casinos, may face an existential threat.
Steep tax hikes may drive customers to offshore sites, where the state earns nothing. Governor Murphy claims the tax compromise is fair and competitive, but its success depends on the market's survival. The tax rate was previously 13% for mobile sports betting and 15% for internet casino gaming.
Michael Molter, the sports betting analyst, has a background in scouting college basketball for Florida State University and the University of Alabama. In his spare time, he enjoys playing basketball, hiking, and kayaking, and watching mid-level tennis matches.
[1] Assembly Bill A5971 [2] Tipico fined $25,000 [3] Reducing Impulsive Gambling [4] NJ.com [5] DraftKings CEO statement
- Michael Molter, with a background in college basketball scouting, closely monitors the effects of New Jersey's increased online sports betting tax rate on various aspects such as Assembly Bill A5971, sports betting revenue data, tennis betting odds, and sportsbook reviews.
- Tactful fines of $500 to $1,000 per incident could be applied to sportsbooks offering microbets, as suggested by Assembly Bill A5971, aimed at reducing impulsive gambling.
- Regarding the proposed ban on microbetting, DraftKings' CEO has minimized the risk of closure, stating that microbetting constitutes only a small share of their betting handle and is not considered a major threat.
- The high cost of doing business in New Jersey is causing concern, prompting sportsbooks to consider leaving sites like Caesars Atlantic City and Ocean Casino, which are tied to low-revenue casinos.
- Industry analysts like Michael Molter speculate that customers might be driven to offshore sites due to steep tax hikes, potentially costing New Jersey state revenues from the sports betting market.
