By Raymond Lesniak
Recently legislative proposals have been made to increase taxes on online gaming. Big mistake.
When I proposed to legalize sports betting and online gaming in New Jersey, five of Atlantic City casinos had closed and 16,000 jobs had been lost. Our racetracks at Monmouth Park and The Meadowlands were in jeopardy of closing, threatening another 5000 jobs.
It was for those reasons, as Chairman of the Senate Economic Development Committee, I began a nearly ten-year journey to challenge the federal ban on sports betting and to authorize online gaming in New Jersey. I was successful on both despite eight losses in federal court, before the US Supreme Court ruled in my favor and our casinos became the beneficiary of the added revenue needed to reopen the five casinos and restore lost jobs. In addition, horse racing and the jobs at Monmouth Park and The Meadowlands were preserved.
Looking for more revenue to the state budget, some legislators are now looking to increase the tax on online gaming, now set at 15%. That’s bound to reduce online gaming, cutting revenue the casinos need to keep operating and providing jobs.
The tax increase proponents point to much higher taxes on online gaming in New York, with its 51% tax rate, and Pennsylvania, with its 36% rate.
But they are mixing apples with oranges. The tax increase would fall only on online gaming operations, the casinos and the racetracks get a percentage of the net revenue from online gaming and the sports books. A higher tax will reduce revenue to the casinos and racetracks.
And 90% of sports betting, which has been a boon for Atlanta City casinos and Monmouth Park and The Meadowlands has come from online wagers.
More and more people are visiting Atlantic City and greater NJ area these days, especially bettors from New York, because Atlantic City has risen from the ashes of five casino closures as a result of online sports betting and gaming.
The proposed higher tax by some legislators is irrelevant New York and Pennsylvania, because those states subsidize their racetracks $200-$250 million yearly, while New Jersey gives Monmouth Park and The Meadowlands each about $20 million annually.
A little known fact is New Jersey has more acres of horse farms than any other state, including Kentucky. The demise of our horse racing industry would also lead to some horse farms closing and their open space replaced with warehouses. And what New Jersey doesn’t need is more warehouses.
My message to the New Jersey Legislature is this: Don’t kill the goose that laid the golden egg, and don’t compare apples to oranges. Our casinos and racetracks need the added revenue from online gaming and sports betting as do their thousands of employees and the families they support. Be careful not to kill the goose that laid the golden egg and compare apples to apples, not oranges.
Ray Lesniak served 40 years in the New Jersey State Legislature, the second-longest stint in state history, before his retirement from the Senate in 2018.
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