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.
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.