Governor Chris Christie was always a major driving force and very instrumental in bringing online gambling to New Jersey. Going back to 2014, he was twisting arms and pushing hard for legalization of internet gambling. In his exuberance to get the deal done, he made some promises about what online gambling would bring to New Jersey in the way of windfall revenue taxes. After legislation for online gambling was passed, some of Christie’s promises didn’t exactly materialize right away. And naturally, opponents of legalization piled on claiming that online gambling was a huge failure and had given New Jersey citizens easy access to the addictive habit of gambling.
But hysteria and reality are two different things. Unrealistic expectations led to hysteria whereas reality has painted a different picture that shows online gambling to be a success in New Jersey. Now into the third year of regulated gambling online, Gov. Christie is looking more like a prophet rather than a deceptive politician. Online gambling revenue for 2016 will be very close to $200 million, and if recent trends hold, the industry will be even stronger in 2017.
During the three year existence of internet gambling, casino websites have contributed in excess of $66 million to New Jersey coffers. This money comes from a 15% tax levied on gross gaming revenue (GGR). For 2016, the contribution will be close to $30 million. In addition to the GGR tax, the Casino Reinvestment Development Authority (CRDA) levies a 2.5% tax that goes to Atlantic City redevelopment projects. All New Jersey online gaming operators (currently there are five: Caesars, Resorts, Borgata, Tropicana and Golden Nugget) must each contribute $250,000 annually to research for problem gambling and treatment. There is also an annual permit renewal fee of $250,000 for each online gaming operator.
Add to that tax revenue the economic benefit of new jobs created, taxes on winnings, the economic impact from marketing spend and you have one of the top tax revenue streams in the state. Compared to some of the other well-known sources of tax revenue collected by New Jersey, online gambling has a ways to go before catching up. The tax on cigarettes is $2.70 per pack and generates $150 million per year in taxes. The excise tax for alcohol brings in $110 million annually.
The current $30 million per year in taxes being generated by online gambling is not an insignificant amount. Especially since the gaming industry estimates going forward into 2017 look very robust.
Bottom line – the online gambling industry is an unqualified success for New Jersey, one that the state would be loath to give up.