New Jersey iGaming Sector Faces Changes with New Tax Rates and Sweeps Ban

In a sweeping overhaul of its online gambling laws, New Jersey has officially banned sweepstakes casinos while simultaneously approving a significant tax hike on iGaming and mobile sports betting operators. The legislative changes, passed with overwhelming support in both chambers, signal the state’s aggressive approach to tightening gambling regulation while securing a bigger slice of online gaming revenue.

New Jersey is now among a growing list of states cracking down on sweepstakes-based gambling models. These platforms have long operated in the legal gray zone using dual-currency systems. At the same time, operators in the Garden State will now have to navigate higher taxes, as lawmakers push for a revenue structure that aligns with the rapidly growing online casino sector.

Taxes Jump to 19.75%

In a decision that sent ripples across the online gambling industry, the New Jersey Senate voted 25-14 to increase taxes on iGaming and mobile sports betting to 19.75%, up from the previous 13% for online casinos and 15% for mobile sportsbooks.

The tax hike aligns New Jersey with other states tightening fiscal policies on gambling, including Illinois, which recently introduced a controversial per-wager tax of up to $0.50, prompting major operators like FanDuel and DraftKings to pass transaction fees onto users.

As it turns out, this shift is part of New Jersey’s broader strategy to capture more revenue from its thriving iGaming market, which recorded over $2.38 billion in online casino revenue in 2024 alone. While lucrative for the state, the new tax rates are likely to squeeze operator margins, potentially impacting the size of bonuses, player rewards, and overall competitiveness.

Statewide Ban for Sweepstakes Casinos

In the parallel legislative move that is causing even more buzz, New Jersey lawmakers passed Assembly Bill 5447, a bill that effectively bans sweepstakes casinos statewide. The legislation sailed through the Assembly with a 69-10-1 vote and passed the Senate 34-5, with little debate. It now awaits Governor Phil Murphy’s signature, which is expected imminently.

The law directly targets dual-currency sweepstakes models, commonly used by platforms like Global Poker and ClubWPT Gold, which allow players to buy virtual currency that can be redeemed for real cash prizes. While these models have allowed operators to skirt traditional gambling laws, New Jersey regulators are drawing a firm line.

Under the new rules, not only are operators banned from offering sweepstakes-style gambling, but anyone promoting these services faces criminal penalties. That includes affiliate marketers, influencers, and advertising partners.

Notably, the bill does include exemptions for legitimate promotional contests, such as branded sweepstakes from retail companies, but it criminalizes the operation and marketing of sweepstakes casinos as gambling products.