State Treasurer Elizabeth Maher Muoio told lawmakers this week that legal sports betting may not bring New Jersey the kind of tax revenue most had initially hoped for.
Muoio gave testimony at an Assembly Budget Committee meeting Monday, telling those in attendance the state is projecting sports betting will create just $13 million in tax revenue in the fiscal year beginning July 1.
That’s well below the $50 to $100 million some members of the New Jersey legislature were expecting.
Plus, it is even lower than more conservative figures found in a 2017 American Gaming Association report that predicted New Jersey sports betting could generate as much as $200 million in revenue annually, with $21 million of that going to the state.
NJ Senate President Stephen Sweeney told NJ Advance Media that Muoio’s figures sounded low.
But, since sports betting is new, nobody really knows what to expect. Sweeney also said the state is better off following more conservative estimates rather than being overly optimistic.
State Assemblyman Ralph Caputo told NJ.com he expects the numbers will ultimately be much bigger than Muoio’s predictions.
However, Sweeney and an anonymous source within Gov. Phil Murphy‘s administration said no one ever thought sports betting would be a real game-changer. Nor would it produce the kind of tax revenues needed to have a major impact on the state’s estimated $37.4 billion budget.
Last week, the US Supreme Court voted 6-3 in favor of lifting a federal ban on sports gambling. This gave all 50 states the right to legalize sports betting inside their borders.
New Jersey lawmakers are now in the process of putting together regulations to govern sports wagering in the state. They are hoping to be the first of many states to open up local sports betting markets.
The Legislature is looking at June 7 as the date legislation with clearly defined regulations will be passed.
NJ sports betting and the budget
However, most aren’t looking at sports betting as a magic pill that will cure any budget woes ailing the state.
During Monday’s budget hearing, Muoio said market observers and the state’s own tax analysts estimate sports betting will bring in $124 million in total revenue. She said $13 million of that will go to the state in tax revenue.
Muoio said the figures are based on sports betting tax rates of between 8 and 15 percent.
The legislation (A3911) currently being considered by lawmakers would see sports betting operations at casinos and racetracks charged an 8 percent tax. Online sports betting operations would pay 12.5 percent.
A competitive market
One of the reasons for the disparity between original projections and the figures Muoio quoted Monday may be the competition.
Neighboring states such as Pennsylvania have been given the green light to move forward with sports betting as well. Such a move will likely cut a lot of out-of-state business out of the local market.
However, some of the original projections were likely always too high.
Nevada, the only state with legal, full-scale, single-game wagering prior to the Supreme Court decision, generated a record $249 million in sports betting revenue last year. A total of $17 million of that money went to the state in tax revenue.
Last week, Fitch Ratings said sports betting will not contribute substantially to New Jersey’s tax revenue haul.
However, state officials remain hopeful sports gambling will be a boon to the casino, racetrack, and tourism industries. Plus, any additional tax revenue it creates will still be beneficial to the state in some way.