New Jersey Sports Gambling
Lottery and Gambling Winnings
Winning the Lottery or scoring on a sports wager can change your life in profound ways. Congratulations on your lucky break!
Jan 26, 2021 New Jersey Sports Betting Sports betting in New Jersey has exploded in recent years, with the Garden State now rivaling Nevada as America’s biggest betting market. To bet on sports in New Jersey, you need to be at least 21 years of age and must be physically present in the state, even when wagering online. NJ sports betting kicked off on June 14, 2018 with two retail sportsbooks in the state. That number quickly exploded and the market now boasts 19 sportsbook apps and 11 retail books at Atlantic City casinos and North Jersey racinos. Monmouth Park was the first to open its betting. NJ Sports Betting Sites New Jersey currently has 16 sports betting sites or apps approved by the DGE to accept bets, which means plenty of options for bettors. Better yet, online sportsbooks in New Jersey are among the most aggressive in terms of signup bonuses, due to both the amount of competition and favorable tax rates for operators. New Jersey saw sports wagering get legalized in the state back in 2018. Over the years, the betting entities have grown in number, leaving players spoiled for choice when it comes to online gambling platforms to choose from. SPORTS WAGERING Sports Wagering has been authorized pursuant to P.L. On this page you will find the Sports Wagering Law, the Emergency Rules for Sports Wagering Promulgated by the Division of Gaming Enforcement, the Registration Form to file prior to wagering if you are a sports insider, and the answers to Frequently Asked Questions.
Just remember that your good fortune includes a responsibility to pay taxes and fees on those winnings.
Gambling Winnings:
In 2018, Governor Phil Murphy signed a law that authorized legal sports betting in New Jersey. The law (A4111) allows people, age 21 and over, to place sports bets over the internet or in person at New Jersey's casinos, racetracks, and former racetracks. Sports betting is now among the many forms of gambling winnings that are subject to the New Jersey Gross Income Tax, including legalized gambling (sports betting, casino, racetrack, etc.) and illegal gambling.
Lottery:
New Jersey Lottery winnings from prize amounts exceeding $10,000 became subject to the Gross Income Tax in January 2009.
New Jersey Income Tax is withheld at an amount equal to three percent (3%) of the payout for both New Jersey residents and nonresidents (N.J.S.A. 54A:5.1(g)).
Withholding Rate from Lottery Winnings
The rate is determined by the amount of the payout. If a prize is taxable (i.e., over $10,000), the entire amount of the payout is subject to withholding, not just the amount in excess of $10,000. The withholding rates for gambling winnings paid by the New Jersey Lottery are as follows:
- 5% for Lottery payouts between $10,001 and $500,000;
- 8% for Lottery payouts over $500,000; and
- 8% for Lottery payouts over $10,000, if the claimant does not provide a valid Taxpayer Identification Number.
Companies that obtain the right to Lottery payments from the winner and receive Lottery payments are also subject to New Jersey withholdings. Each company is required to file for a refund of the tax withheld, if applicable.
LotteryNew Jersey Sports Gambling Record
New Jersey Lottery winnings from prize amounts exceeding $10,000 are taxable. The individual prize amount is the determining factor of taxability, not the total amount of Lottery winnings during the year.
- For example, if a person won the New Jersey Lottery twice in the same year, and the winning prize amounts were $5,000 and $6,000, these winnings would not be subject to New Jersey Gross Income Tax. However, if that person won the Lottery once and received a prize of $11,000, the winnings would be taxable.
- This standard for taxability applies to both residents and nonresidents.
- The New Jersey Lottery permits donating, splitting, and assigning Lottery proceeds to someone else or to a charity. If you choose to donate, split, or assign your Lottery winnings, in whole or in part, the value is taxable to the recipient in the same way as it is for federal income tax purposes.
New Jersey Sports Gambling Laws
New Jersey Sports Gambling Age
Making Estimated Payments
If you will not have enough withholdings to cover your New Jersey Income Tax liability, you must make estimated payments to avoid interest and penalties. For more information on estimated payments, see GIT-8, Estimating Income Taxes.
Out-of-State Sales:
Out-of-state lottery winnings are taxable for New Jersey Gross Income Tax purposes regardless of the amount.
Gambling winnings from a New Jersey location are taxable to nonresidents. Gambling includes the activities of sports betting and placing bets at casinos and racetracks.
Calculating Taxable Income
You may use your gambling losses to offset gambling winnings from the same year as long as they do not exceed your total winnings. If your losses were greater than your winnings, you cannot report the negative figure on your New Jersey tax return. You must claim zero income for net gambling winnings. For more information, see TB-20(R), Gambling Winnings or Losses.
You may be required to substantiate gambling losses used to offset winnings reported on your New Jersey tax return. Evidence of losses can include your losing tickets, a daily log or journal of wins and losses, canceled checks, notes, etc. You are not required to provide a detailed rider of gambling winnings and losses with your New Jersey tax return. However, if you report gambling winnings (net of losses) on your New Jersey return, you must attach a supporting statement indicating your total winnings and losses.
Reporting Taxable Winnings
Include taxable New Jersey Lottery and gambling winnings in the category of “net gambling winnings” on your New Jersey Gross Income Tax return.
New Jersey has been trying to legalize sports betting for years. One of the primary hurdles for that legalization has been the federal Professional and Amateur Sports Protection Act (PASPA). That law, enacted by Congress in 1992, make it unlawful for a government entity to authorize, operate, etc., gambling on competitive games in which athletes participate. PASPA – also known as the Bradley Act – excluded Oregon, Delaware, Montana, and Nevada from its sports betting prohibitions. New Jersey (and any other state which had licensed casino gambling) had a 1-year window to pass laws permitting sports betting. However, New Jersey did not pass such a law within that window of time.
New Jersey Online Sports Betting
Later, in 2011, New Jersey voters approved an amendment to the state constitution to permit the legislature to create laws to permit sports gambling. (Sports gambling would still not be permitted for college sporting events taking place in the State of New Jersey or involving a New Jersey team.)
In 2012 the first Sports Wagering Act was introduced to permit betting on sports at racetracks and casinos. That Act was challenged by virtually all major sports associations (NFL, MLB, NHL, etc.) and ultimately struck down by the District Court as violating PASPA.
In 2013 the State was able to bring in online gambling. The New Jersey Division of Gaming Enforcement tracks the revenue from online gambling in New Jersey and in April of 2018 alone, online gambling brought in nearly 4 million dollars in taxes, and that revenue has been steadily increasing over the past four years.
In 2014 a new Sports Wagering Act was introduced and enacted which specifically permitted casinos and racetracks to provide sports betting without the State’s involvement (in order to get around PASPA’s prohibition on government entities being involved in the gambling). However national sports leagues once again sued the State, asserting that it still violated PASPA and both the New Jersey District Court and the Third Circuit Court of Appeals agreed. However, this time New Jersey appealed to the United States Supreme Court and the Supreme Court ruled on May 14, 2018 that PASPA was unconstitutional.
In the case of Murphy v. National Collegiate Athletic Association,
the U.S. Supreme Court found that PASPA violates the anti-commandeering rule. The 10th Amendment to the U.S. Constitution states that all legislative power not conferred on Congress by the Constitution is reserved for the States. This means that the federal government can only create laws where it is specifically permitted to do so under the Constitution; all other laws are left to the States to create and enforce. Since PASPA dictates what a state legislature may and may not do, it is unconstitutional.
Since the U.S. Supreme Court’s decision in May of 2018, many of the State’s racetrack and gambling facilities have been waiting with bated breath for some final “all clear” signal from Governor Phil Murphy to commence sports betting. (Delaware has already begun sports betting since the May 2018 decision.)
On June 6, 2018 the legislature approved a measure to regulate and tax sports betting in licensed casinos, racetracks, and online. At live sites, proceeds will be taxed at 8.5%-9.75% (with 1.25% going to local counties and municipalities), while online betting will be taxed at 13%.
While the legislature has included a provision preventing gambling sites from being penalized before regulations are finalized, it appears that most venues are awaiting a clear signature or signal from the governor to start opening their doors to sports gambling.
The attorneys at McLaughlin & Nardi, LLC are continuously staying abreast of new and evolving state and federal laws and can advise both businesses and individuals on the many varied ways that these laws may effect them. To learn more about what we may be able to do to help, please visit our website, or contact one of our New Jersey lawyers by e-mail or telephone at (973) 890-0004.