Garden State tax increase can be managed, Truist analyst says

David McKee

24 June 2025 at 4:35pm UTC-4

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Following up on reporting in NJ.com, Truist Securities analyst Barry Jonas weighed in on the tax-increase compromise reached between New Jersey Gov. Phil Murphy and the state Legislature. Jonas believes the agreed-upon amount of the hike will be 19.75%.

In a June 24 investor note, Jonas said he “had expected an operator-friendly compromise and think ~20% is manageable” for OSB providers. Murphy had wanted the tax rate on igaming and online sports betting raised to 25% from the 15% for igaming and 13% for sports betting.

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Jonas compared a 19.75% rate favorably to those being levied in New York, New Hampshire and Illinois, all 51%. He further opined that the tax hike could be mitigated simply by reducing promotional expenditures, which he felt would make back 50% of the higher levy in 2026 and more in years to come.

The analyst estimated the full-year effect of an increased impost at US$67 million for Flutter Entertainment, corporate parent of FanDuel. For rival DraftKings, it would be US$56 million, mostly on the igaming side in both cases.

For the balance of 2025, Jonas extrapolated, Flutter could expect a gross effect of US$35 million, were the tax hike implemented by July 1. The hit to DraftKings was estimated at US$30 million.

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Jonas placed those increased costs in the context of Flutter’s annual cash flow of US$1.1 billion and DraftKings’ US$850 million. The US$30 million-US$35 million figure did not account for possible mitigation efforts.

DraftKings and FanDuel were not the only New Jersey operators pondered by Jonas. He expected BetMGM to pay an additional US$27 million in taxes, Caesars Entertainment to pony up an extra US$18 million, while Penn Entertainment would be on the hook for US$4 million more.

Given a roughly 20% tax rate, “we don’t see the need for any mitigation strategies beyond promos,” Jonas wrote. He discounted the appeal of customer surcharges, higher bet minimums or diversification into prediction markets.

In what remains of 2025, Jonas thought, operators could recoup 20% of the extra payout by curbing promotions. “Over time, we could see even greater mitigation of the higher tax rate.”