What the Sweepstakes Ban Entails
Bill A5447 aims to prohibit online sweepstakes casinos that operate using dual-currency systems, such as “Gold Coins” and “Sweeps Coins,” which allow players to win real prizes. The bill defines this setup as illegal gambling and gives state agencies power to go after it.
The bill has cleared both chambers with wide margins: 69-10 in the Assembly and 34-5 in the Senate. If signed by Governor Murphy, it would put New Jersey in line with other states like New York and Connecticut that have already moved to shut these platforms down.
The bill authorizes the Division of Consumer Affairs to investigate violations and impose penalties, including fines of up to $250,000. It also makes no exceptions for sweepstakes models that disguise gambling as “free play” promotions.
Online Gambling Tax Hike Details
New Jersey isn’t just cracking down on sweepstakes casinos, it’s also coming for the cash flow. Lawmakers have officially passed Bill A5803, bumping the tax rate on online gambling operators to a flat 19.75% across the board. That means online casinos, sportsbooks, and daily fantasy sports (DFS) are all now taxed at the same rate, up from the previous 15%, 13%, and 10.5%, respectively. Governor Phil Murphy signed the increase into law as part of New Jersey’s massive $58.1 billion budget for Fiscal Year 2026.
So why the sudden spike? Money, plain and simple. Online gambling in New Jersey is booming. In 2024 alone, the sector raked in $2.9 billion in gross revenue, with a 29% year-over-year surge just in May. Lawmakers saw dollar signs and jumped at the chance to tap into the momentum.
Murphy originally proposed a steeper 25% tax rate, but that idea hit a wall of opposition from major industry groups like iDEA Growth (Interactive Digital Entertainment Association) and the Sports Betting Alliance. Critics warned the hike could backfire by making the market less competitive and driving players toward offshore platforms with zero regulation or consumer protections.
Despite the pushback, the bill squeaked through. It passed the Assembly on a 45-33 vote, and the Senate wasn’t much wider, at 25-14. That’s about as close as it gets without a buzzer-beater.
For operators, it means thinner margins and potential cutbacks. For players, it could mean fewer bonuses, tighter odds, or scaled-back promotions. But for the state? It’s a multi-million-dollar payday—assuming the regulated market can hold onto its users.
Additional Measures in the Legislation
The legislation also introduces stricter regulations, including criminalizing proxy betting (placing bets on behalf of someone else) and insider wagering by individuals with non-public information, like sportsbook employees or affiliates. Violations involving profits over $75,000 could now be charged as second-degree felonies, carrying hefty fines and potential prison time.
Industry Response
The Social and Promotional Games Association (SPGA) has pushed back hard against the sweepstakes ban, calling it overly broad and potentially damaging to legitimate business models. They argue that sweepstakes platforms are lawful promotional tools, used not just in gaming but across industries like retail and travel.
According to SPGA, their member platforms offer free-to-play entertainment with built-in consumer protections and age verification, and therefore should not be lumped in with unregulated gambling operations.
Broader Implications and National Context
New Jersey’s crackdown is part of a growing wave of state-level enforcement targeting online gambling loopholes. Michigan, Montana, and Washington have all taken steps in recent years to regulate, or outright ban sweepstakes-style casinos, which have often operated in legal gray zones.
As these platforms gain popularity, lawmakers across the U.S. are ramping up efforts to define clear legal boundaries and rein in what they see as unlicensed, unregulated gambling.
Blaise Luis
