Nj Sports Gambling Tax Revenues
Nj Sports Betting Tax Revenue

Part of the fun of gambling is the suspense.

New Jersey sports betting handle totaled more than $4.58 billion in 2019, and taxes on revenue won by the mobile and land-based sportsbook operators delivered over $36.5 million to state and local.

It wouldn’t be as exciting if you knew the outcome of your wagers ahead of time.

Another plus is that many types of gambling are legal in New Jersey. Casino gambling, horse racing, the state lottery, bingo and most recently, sports betting.

Gambling is even more fun when you win.

And, when you gamble at authorized NJ betting sites, you will be paid.

What you may not have given much thought to, though, is that NJ gambling winnings are taxable. Winnings obtained from illegal gambling applies here as well.

In this article, we will tell you everything you need to know about the federal and New Jersey state laws concerning gambling winnings and taxes.

Any sports betting tax revenue collected from New Jersey’s racetracks goes into the State of New Jersey General Fund, and the new 1.25 percent additional tax will go the municipalities in which the racetracks are located. Nevada: The Silver State has the lowest tax in the nation on gaming and sports betting — 6.75 percent.
NJ online sports betting revenue has exploded with the return of American professional sports, including the NBA and MLB. Online sportsbooks won an impressive $29.6 million in July, up from $12.6 million in June. August may prove to be even bigger, with the NHL playoffs now underway as well.
New York is a big loser for not legalizing mobile sports betting - missing out on millions of dollars in tax revenue while wagers on games by Big Apple fans are placed legally in New Jersey or in.
Monthly Sports Wagering Revenue Reports are issued in conjunction with the monthly press release two business days after receipt at 2:00 p.m. Information contained on these reports include: monthly and year-to-date sports wagering win by casino, racetrack and internet; calculation of Sports Wagering tax and Web sites reported by casino.

Are NJ gambling winnings taxable?

According to the IRS, gambling winnings in any state, including New Jersey, “are fully taxable and you must report the income on your tax return. Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.”

The IRS doesn’t mention sports betting, but winnings therefrom also count as gambling winnings and are, thus, taxable.

How much are NJ gambling winnings taxed?

Whether you’re a New Jersey resident doesn’t have any bearing on your liability to pay federal and state taxes on your winnings.

So, this includes the total of your winnings, if any, that is withheld for state taxes.

However, the type of gambling and, whether the winnings are from a retail or online site, does matter.

Taxes on NJ state lottery winnings

Prior to 2009, NJ state lottery winnings were not taxable.

However, effective January 2009, New Jersey Lottery winnings in excess of $10,000 became subject to the state gross income tax.

The percentages withheld from the state lottery payouts of more than $10,000 are as follows.

If the payee provides a valid Taxpayer Identification Number (TIN):

5% of payouts of $10,001 to $500,000.
8% of payouts more than $500,000.

If the payee does not provide a valid TIN:

All payouts of more than $10,000 are taxed at 8%.

Rules on shared and multiple lottery wins

If two or more people win a given lottery prize and split the proceeds, as long as the total prize exceeds $10,000, it is taxed.

Each recipient must, therefore, assume liability for his or her share of the taxes even if the individual’s share does not exceed $10,000.

Furthermore, if a person wins the NJ Lottery more than once in the same year, each win is considered separately in determining whether or not it is taxed.

For example, a person who wins the lottery twice in one year, once for $6,000 and once for $5,000, would not have to pay any state tax on those winnings.

However, a person with a single state lottery win of $11,000 would have 5% of that amount withheld for state taxes.

Federal and state taxes on other NJ gambling winnings

The state lottery is one form of gambling in New Jersey for which winnings are taxable.

In fact, gambling operators must report individual wins over a certain amount for some types of gambling to the IRS.

Federal tax form W2-G

All New Jersey-licensed gambling establishments, including casinos and racetracks, are required by federal law to report certain gambling winnings to the IRS on Form W2-G.

However, the minimum win for this to happen varies, depending on the type of gambling, as indicated below:

Horse Racing: Winnings exceeding $600 on a $2 wager or 300x any larger amount wagered.
Slot Machines and Bingo: Winnings (not reduced by the amount wagered) that exceed $1,200.
Keno: Winnings (reduced by the amount wagered) that exceed $1,500.
Poker Tournaments: Winnings (reduced by the amount of the buy-in) that are more than $5,000.

Amount withheld from winnings for federal and state taxes

In every such instance, the gambling establishment must file Form W2-G to report the win to the IRS and send a copy of the form to the payee.

Since winners need this info to prepare their tax returns, they will usually receive a copy of Form W2-G in January of the following year.

Typically, the gambling facility, where the win occurred, will withhold a certain amount of the gambler’s winnings for federal and state taxes.

Before 2018, the standard withholding amount for federal taxes was 25% for those who provided a valid TIN and 28% for those who didn’t.

However, starting in 2018, the withholding rate for federal taxes is now a uniform 24%.

The amount withheld for state taxes varies from state to state.

In New Jersey, it is only 3%. That is the tax rate regardless of whether you live in New Jersey or not as long as the reportable winning took place in New Jersey.

The winner’s responsibility

The gambling facility must file Form W2-G and withhold the appropriate tax from your winnings if it meets the specified criteria.

But whether it does so or not, you still need to report your net gambling winnings as income when you file your tax return.

Obviously, gamblers who win big will find it disappointing, in most instances, to have to fork over a sizable chunk to the government.

But here’s some other news that may help you.

Ultimately, the amount of tax you owe on your gambling winnings will depend on your taxable income bracket. And, if you itemize your deductions, the extent to which you could offset those winnings with documentable gambling losses.

How gambling losses can help offset winnings

You can deduct your gambling losses, but only to the extent of your winnings.

If you lost more money gambling than you won that year, you could only deduct losses up to the amount reported as winnings. You cannot report any amount above that.

In other words, you can’t report your gambling income as a negative amount.

However, you can combine your losses from different types of gambling.

For example, if you won a big jackpot on a slots machine, but lost money on other casino games, poker and sports betting, then those losses count.

On the flip side, due to the recent substantial increase in the allotted amount you can take on your tax return as a standard deduction, itemizing your deductions may not be more beneficial tax-wise after all.

Seeking the advice and services of a professional accountant could be a worthwhile investment.

Which tax forms should you use to report

Nj Sports Gambling Tax Revenue