Sports betting first became legal in New Jersey in June, 2018. Since then, there is no denying that it has become a big cash cow not only for Atlantic City casinos and their NJ online gambling partners but also for the State of New Jersey. Sports betting in AC is moving quickly and everyone wants a piece of the pie.

New Jersey sports books are also closing in on Nevada, even though that state has had sports betting since 1949. Total handle at Nevada sports books through the first 11 months of 2019 were $4.74. A second scenario raises the mobile sports betting tax rate to 15%, boosting the annual tax number to $139.5 million. Finally, adding three more sports betting licenses in the New York City area — assuming three casinos are built in that region — raises that number to $166.2 million. All gambling winnings are taxable under the Internal Revenue Code. Winnings from playing online in New Jersey for U.S. Residents are no different than from playing online in Nevada or Delaware, or from playing in brick and mortar casinos throughout the United States. State Sports Betting Tax Rate Arkansas 13-20% DC 10%; revenue minus expenses for state online lottery operations Delaware 50% Illinois 15% Indiana 9.5% Iowa 6.75% Mississippi 12% (8% state/4% local) Montana Collects revenue minus expenses State Sports Betting Tax Rate Nevada 6.75% New Jersey 9.75% in-person/14.25% online New Hampshire Not Yet.

Sports Betting in AC

According to a November 12 article on www.pressofatlanticcity.com, over the course of not quite a year and a half, NJ sportsbooks have taken in over $3 billion in legal wagers, generating $284.6 million in gaming revenue and over $36 million in taxes.

Some government officials feel that it is not right that Atlantic City itself does not directly reap the financial benefits and that needs to change.

How is Atlantic City benefiting from the substantial tax revenue from NJ sports betting? Or is it?

At a recent meeting of the Atlantic City Taxpayer’s Association, Atlantic City Mayor Marty Small made the following comment:

“In 14 months, New Jersey has overtaken Las Vegas as the No. 1 sports betting destination, and a lot of it has to with the success of Atlantic City and online. But we don’t get one penny. … That’s unacceptable.”

Small said that Atlantic City could use the additional money for property tax relief.

The mayor does not consider it fair that a municipality that is home to nine casinos receives no direct tax revenue at all generated by sports betting. Meanwhile, municipalities where there is a racetrack but no casinos do.

East Rutherford in Bergen County is home to the Meadowlands, and Oceanport in Monmouth County is home to Monmouth Park. Both facilities offer online sports betting in addition to horse racing. Atlantic City has a racetrack, too, but it closed in January, 2015.

The existing state law relating to taxes on gross sports betting revenue

In October, 2018, Gov. Murphy signed a bill into law whereby revenue generated from sports betting or a “joint sports wagering operation” would incur an additional 1.25 percent tax. The Casino Reinvestment Development Authority (CRDA) would receive this money for the purpose of Atlantic City “marketing and promotion.”

However, according to the state Division of Gaming Enforcement, that has not been happening in practice. Instead, the CRDA has been giving large amounts of this money to the Meadowlands and Monmouth Park municipalities and counties rather than letting it stay in Atlantic City. Sports betting in AC was just the beginning.

Mayor Small said that he and other Atlantic City officials are “ecstatic” about the “excitement and energy” that sports betting has brought to the city. However, they would like Atlantic City to reap more of the financial rewards.

Assemblyman John Armato said that “money generated in Atlantic City needs to stay in Atlantic City.” Armato and fellow Assemblyman Vince Mazzeo both indicated a willingness to explore other options on how the tax revenue from sports betting should be allocated.

Difference between New Jersey and other states how sports betting tax revenue is distributed

The manner in which sports betting tax revenue gets distributed in New Jersey is notability different than in other nearby states. Rather than an agency such as the CRDA controlling the distribution, in Pennsylvania, a portion of the 35 percent tax rate goes directly to host municipalities and their respective counties. In New York, a portion of the 10 percent tax rate likewise goes directly to host municipalities and their respective counties.

Could a lack of trust by New Jersey in Atlantic City be a factor?

Michael Pollock, managing director of Spectrum Gaming Group, voiced his opinion on the matter. Pollack suggested that New Jersey’s apparent reluctance to give any of the tax revenue from sports betting to Atlantic City directly makes sense based on “the history between the state and the city.” Pollock further stated that “there has never been a great deal of confidence in the municipal government of Atlantic City to effectively manage its finances.”

Dustin Gouker, lead sports betting analyst for PlayNJ.com, who doesn’t live in New Jersey, presumably feels that the state doesn’t trust Atlantic City. He had this to say:

“I am not aware of another state that handles a jurisdiction with kid gloves. I would be frustrated if I was someone who lived or worked in Atlantic City.”

On the other hand, one of the NJ sports betting tax bill’s primary sponsors, Assemblyman John Burzichelli, denied that the legislation reflected how capable the state thinks Atlantic City is of managing its finances. Unlike the sports betting municipalities in the other nearby states, Atlantic City has a redevelopment authority. Therefore, “the tax is getting to Atlantic City. It’s just going through the Casino Reinvestment Development Authority.”

Nj Sports Gambling Tax Returns

New Jersey casinos have seen a rise in the taxes they pay on sports betting revenues after state governor Phil Murphy signed a bill, that gives approval to a further tax of 1.25% on sports betting operations.

These funds will go towards the Casino Reinvestment Development Authority (CRDA). The CRDA collects money from casinos in the state and spends them on both private and public projects in New Jersey.

Nj Sports Gambling Tax Advice

As a result of this tax increase, any sports bets made at a physical racetrack or casino in the state will be taxed at 9.75%. For bets made on mobile, there will be a 14.25% tax.

The increase came after the CRDA complained that following Atlantic City’s bankruptcy and its subsequent emergence from this crippling condition that it had lost about $22m ($16.7m) in revenues.

CRDA’s role in New Jersey

The CRDA formed initially in 1984 to try to help increase the number of tourists visiting Atlantic City.

It has seen a decent increase in tax revenues from sports betting following the Supreme Court decision in May 2018 to end the federal ban. To date, following the opening up of sportsbooks in New Jersey during June, about $16.5m has gone towards respective state bodies.

Most of the revenue the CRDA accumulates comes from charges for parking at casinos. Generally, the CRDA’s rate is $3 for day parking and $5 for parking at night.

The funds raised are used to assist community and economic development both in Atlantic City and more widely across the state. However, many locals believe that the organization has lost sight of this mission in recent years and not much has been done to help tourism in the state.

The state auditor in New Jersey looked into this issue. The auditors were of the belief that funds had not in fact been properly utilized by the CRDA and that many projects have subsequently been mismanaged.

They condemned the decision to contribute more than $4m (£3m) towards the Miss America Group’s pageant, which has struggled in recent years as interest declines.

Critics have claimed the CRDA was created in order to allow state officials to use the windfall from casino gambling to distribute in a way they saw fit without needing much public accountability or transparency. With the state having such a lucrative gambling sector, it is hoped that the CRDA realigns its focus and approach in the coming years.

The CRDA has responded to the criticisms. Chairman Robert Mulcahy III said that it was the issues raised were the fault of the state. He referred to the abolition of the Investment Alternative Tax as being a catalyst for chaos within the CRDA, making it near impossible to properly organize its programs.

This issue is likely to rumble on for some time. The CRDA will now get its slice of sports betting revenues so it is hoped that rather than just receiving more money, it will actually make some organizational changes.

This would be in the hope that the funds can be used in a more useful manner than has previously been seen.

New Jersey sports betting scene

New Jersey was the second state to open up sportsbooks following the end of the federal ban in May.

It has proved to be a wise decision as its revenues are increasing month on month significantly. The state has been able to capitalize on seasons starting for college football and the NFL. It has significantly helped boost its profile, especially as most states have yet to enter the scene.

To date, numerous mobile and online sports betting platforms have opened in the state. FanDuel and William Hill are at the forefront of this movement. Other popular online betting apps in New Jersey include those provided by Draft Kings, playMGM and Play Sugarhouse.

William Hill has a strong track record of providing quality sports betting offerings in Europe. It is now the operator for the Ocean Resort Casino and Monmouth Race Park offerings.

With close neighbors Rhode Island and New York both set to offer sports betting in the near future, New Jersey has benefited from its advantage as first mover. Its operators will have developed a loyal fan base among out-of-state residents who went to New Jersey to get their sports betting fix.