State pushes forward with regulatory overhaul despite industry pushback
New Jersey has officially banned sweepstakes betting and implemented a significant tax increase on online gaming and sports betting revenues, signaling a broader trend among U.S. states to tighten regulatory control and capture greater tax revenue from the booming digital betting sector.
Bill A5447: A Decisive Ban on Sweepstakes Betting
The passage of Bill A5447 through both legislative houses, with a 34-5 final vote in the Senate (one abstention), formally outlaws sweepstakes-based gaming models across the state. The bill, first introduced in March 2025, had gone through multiple committee reviews, including the Assembly Tourism, Gaming and the Arts Committee and the Appropriations Committee, before finally reaching a full vote on 30 June.
The law prohibits any entity from offering sweepstakes-style games as a proxy for real-money gambling, closing a controversial loophole that previously allowed some operators to function outside traditional gaming regulations. Enforcement responsibilities will fall to the Division of Consumer Affairs and the Division of Gaming Enforcement (DGE), which are now tasked with implementing compliance oversight and issuing penalties.
This move has not gone unchallenged. The Social and Promotional Games Association (SPGA), which initially praised efforts to regulate the space, turned sharply against the final version of the bill, calling it “reckless” and “shortsighted.” The SPGA argued that banning sweepstakes without establishing a clear licensing path strips consumers of safe alternatives and could push users toward unregulated offshore sites.
Online Gaming and Sports Betting Tax Rate Raised to 19.75%
Alongside the sweepstakes ban, the New Jersey Senate voted 25-14 in favor of raising taxes on online gaming and mobile sports betting from their previous rates of 13% and 15%, respectively, to a new unified rate of 19.75%.
The new rate aligns New Jersey with a growing list of U.S. states reevaluating taxation models amid soaring revenues from digital betting. In May 2025 alone, New Jersey reported record-breaking online sports betting revenue, prompting lawmakers to argue that the industry could afford a higher contribution to state coffers.
Governor Phil Murphy is expected to sign the bill into law in the coming days.
Industry Impact: Operators May Recalibrate Strategies
This tax increase mirrors recent developments in Illinois, where House Bill 1928 implemented a per-wager tax that led operators like FanDuel and DraftKings to introduce a $0.50 transaction fee for bettors. While it’s too early to say if similar user-facing fees will be imposed in New Jersey, the potential for consumer cost pass-through remains a point of debate.
As the U.S. iGaming and mobile betting market matures, states like New Jersey are beginning to shift from simply enabling access to actively managing economic and social outcomes. Whether this dual move—a ban on sweepstakes and higher taxes on operators—will serve as a model for other jurisdictions remains to be seen.
Looking Ahead: Regulatory Tightening and Global Collaborations
These latest legislative changes come on the heels of New Jersey signing a Memorandum of Understanding (MoU) with the United Arab Emirates, focusing on cybersecurity and responsible gaming standards—highlighting the state’s intent to balance innovation with integrity in its gambling ecosystem.
The message is clear: New Jersey aims to remain a leader in the regulated U.S. gaming market, but on its own evolving terms.
