New Jersey gambling taxes

New Jersey gambling tax is the price you pay for a regulated market; horse racing, casino, sports betting, and more are all legal in the Garden State and are audited for fairness.

Generally, you’re faced with the federal rate on gambling winnings, which is set at 24%, and your winnings will also be subject to New Jersey income tax, which is set at 3%. It’s a little different for the lottery.

For the most part, NJ gambling taxes on winnings are withheld automatically, but there are thresholds at which you should receive a federal tax form called a W-2G. Its purpose is so that casinos and racetracks can report significant wins to the IRS, and they’re required by law to do so.

You’ll receive a W-2G from the organization you won money from (casino, sports betting, lottery operator, etc.), and they’ll send another copy to the IRS.

Is the tax rate different for each type of gambling?

Below is a quick-reference guide for NJ gambling tax and W-2G forms:

How to pay tax in NJ on gambling winnings 

Winnings are fully taxable, whether you’re a professional or casual gambler. Most winnings are cash, but if you win prizes such as cars or vacations, you’re expected to file tax on their fair market value.

This section gives you a primer of info to get you started with sorting out your New Jersey gambling tax and making sure all your winnings are compliant with the law.

Depending on how much you’ve won, you might want to consider working with an accountant or financial professional.

1. Make sure the organization paying you has your information — This is most important for casinos and sportsbooks, especially offline ones. Online ones usually have all your info before you can make a bet. Casinos and sportsbooks will likely ask you for your ID and SSN before they pay out any money. They’ll require this info to put it all up in W-9, which will help them withhold applicable taxes and send you any additional tax forms you need.

2. Check who needs to pay the IRS — If you win big, usually over $5,000, the gambling retailer will usually withhold taxes automatically and pay the 24% federal tax to the IRS for you. That means the only New Jersey gambling tax you need to worry about will be your income tax, factoring in your winnings. No matter how much you win, keep track of wins and losses; you’ll need them to fill out tax forms anyway.

3. Wait for your W-2G form — If you’ve won enough money to qualify for a W-2G form, your next step is to wait for it to come by. Its purpose is to act as proof of taxes paid and to help you fill out your 1040 for tax returns. You can check whether you should qualify for a W-2G on our table. If you qualify but don’t receive one, inform your casino, sportsbook, or another payer ASAP.

4. Fill out Form 1040 — Keep track of your wins and losses with your W-2G, along with physical and digital receipts, depending on whether you’ve gambled online or retail. File your tax info on a 1040 under ‘other income’. Optionally, you can use tax software for an easier time. The standard form to fill out would be Form 1040 — Schedule 1. If you’re over 65, opt for a 1040-SR—Schedule 1 instead and a 1040-NR — Schedule 1 if you’re not a US citizen or permanent resident. The IRS site offers tons more info about the 1040 forms.

5. Fill out your NJ-specific forms — For your NJ gambling winnings tax return, you’ll need an NJ1040 form or an NJ1040-NR if you’re a non-resident of the state. The New Jersey online gaming tax rate is the same as for retail gambling, which should save some work.

6. Consider itemizing your deductions — Your gambling losses are deductible against your winnings, but only if you itemize all your deductions. Taking the standard deduction is easier, but itemizing can save you some money. Note that your deducted losses cannot exceed your gambling wins in any given year.

Federal tax form W-2G

What is the purpose of a W-2G tax form?

The W-2G tracks your winnings, displaying the amount you’ve won and showing if any winnings were withheld for tax purposes.

Where do I get a W-2G from? 

If you’ve won enough money on a specific type of New Jersey gambling to qualify, your casino, sportsbook, or other gambling operator, will send you one. They’ll also send a copy to the IRS.

How much do I need to win to receive a W-2G?

Check out our table above, which lists the thresholds, and acts as an NJ gambling tax calculator, showing you how much you need to pay in income and federal tax for each type of gambling.

What if I don’t receive a W-2G? 

If you’ve won enough money to qualify for one, contact the payer of your winnings; they should’ve sent one. You still owe taxes if you haven’t won enough money to qualify. The IRS requires you to keep track of your wins and losses with a record or diary, preferably with receipts.

What happens if you don’t report gambling winnings in NJ?

In short, nothing good. The main thing is that you could be out of pocket for even more money — the IRS can quickly slam you with interest-laden penalties and fines for not paying your dues. 

If you receive a W-2G, it’s especially bad to refrain from reporting winnings. If you’ve received a W-2G about your winnings, the IRS has received one too. You are legally obligated to report any income gained from gambling.

NJ state gambling laws

The big three of online casinos, sportsbooks, and poker are all allowed in New Jersey. Other forms of gambling like bingo and the state lottery are also fully available in New Jersey, and are even accessible to slightly younger players than the previously-mentioned forms.

Social gambling in the form of ‘free casinos’ or ‘fake money betting’ also shows up from time to time, with some NJ online gambling sites even offering free versions of their products.

The main legal quirk for online gambling in New Jersey is that you need to be physically located in-state to play for real money. Once you’ve got that sorted, you should be good to go at NJ online casinos. As for how old you need to be to gamble in NJ, it’s 21 for most verticals, but 18s have some options too.

Online casinos Legal since 2013

New Jersey gambling laws are some of the most permissive in the country. It was the first state to legalize internet gambling, and the NJ online casino spaces have been in operation since back in 2013. 

Getting ahead of the legal online casinos game early has benefitted NJ’s online gambling scene immensely, as the best online gambling sites NJ clearly outshine the rest of the US. Lots of casino sites operate in different states, and when they have state-specific websites, it’s completely normal to find that New Jersey’s has the most perks by far. At Time2play, we say New Jersey sets the standard for our online casino reviews.

Whether it’s the fact that NJ online games come with triple the variety of PA’s and MI’s, or that they offer around 5 more payment methods on average, the best NJ casinos are the crème de la crème. For those interested in casino gaming but aren’t quite ready to take the plunge, social casinos provide a terrific avenue into the sector.

• Biggest game libraries — Top sites have 700+
• Lots of software providers — 20+ on average
• Most payment methods — The best casinos offer 15+

• Bonuses aren’t any better than what you find in other states

Online betting sites Legal since 2018

Unsurprisingly, the Garden State pioneered more than just the casino scene. It wasn’t the first state to have legal sports betting — Nevada was a few decades ahead. But NJ did spearhead the push to overturn the USA’s restrictive gambling laws.

It was among the first states to pick up the online sports betting scene in 2018. The current situation? NJ became the first state to break the billion-dollar mark in sports revenue, with Nevada close behind.

So what can you bet on at the best online gambling sites NJ? Practically everything. The only things you can’t bet on are sports games involving local college teams/events. Dog racing is largely illegal too, except for sled races at fairs.

You can bet on professional and out-of-state college events, international sports events, and esports. Obviously, football, basketball and baseball are among the most popular options.

What makes a good sportsbook? According to our data-based ratings, a dream sportsbook should be offering welcome bonuses of at least $500 for deposit matches, or should exceed the $1,000 mark for risk-free bets. 

You should be able to bet on at least 30 different sports, and have access to features like bet builders, cash out and live data for in-play bets. Average payout odds of over 96-97% are ideal, or over 95-96% for live betting. Sportsbooks are more evened out across the US than casinos are, but the best NJ betting sites can fight for the top spot.

• VIP rewards for sports bettors
• Most sports available
• Saturated with top operators

• Can’t bet on local college events

Online poker Legal since 2013

Poker is one of those online casino games that’s in good shape at New Jersey online casinos, too. The same bill that legalized online casino gambling in 2013 helped the NJ poker scene to get ahead of the competition and grow. 

Some of the earliest nj online casino sites to launch, such as 888, have dedicated poker sites, and let you share a single account across the casino, sportsbook and poker verticals.

Online gambling sites in New Jersey again benefit from the size of their operators — big brands bring perks. For example, Caesar’s casino operates in New Jersey, and runs poker through WSOP — the World Series of Poker. WSOP players even earn points for the Caesar’s rewards program.

New Jersey also offers inter-state poker – Nevada, Delaware and NJ merged their player pools back in 2018. With more players to compete for and with, bigger games and better wins arise. 

PokerStars, one of the world’s largest brands for the game, also operates in NJ, and has been doing so since 2016. It offers NJ players daily tournaments, driving up the overall quality of the state’s poker offering.

• Daily tournaments
• Daily tournaments
• Prominent operators offer poker

•  Only three states for inter-state gambling

NJ gambling and safety

Gambling is legal in New Jersey, and legalization here requires good enforcement. With NJ being a particularly permissive state for internet gambling, everyone’s eyes are on them — and the state takes pains to ensure everything’s above board and that gamblers have access to safe casinos.

The supreme licensor is the NJDGE (Division of Gaming Enforcement). The organization is highly transparent about who is and is not legal in the state — all legal operators are listed by the DGE. More about the DGE can be learned on the NJ Office of the Attorney General’s website. 

The DGE is the investigatory body that makes sure operators are playing fair, and its Technical Services Bureau (TSB) tests casino games and internet security. Interesting fact – online slots have to pay out at least 83% for approval. However, while the DGE does the footwork, it is technically the Casino Control Commission (CCC) that issues the licenses.

There are criteria that need to be followed to retain legal status. The one most people care about —casino games and sportsbooks have to be audited for fairness. In addition, every site with an NJ gambling license is required by law to have an easy-to-find responsible gambling page.

You’ll usually see it in the header or footer of the website — it’s usually a big green circle with the letters RG stamped in yellow over a silhouette of New Jersey.

Any winnings you score on these safe and legal casinos are subject to NJ gambling tax, so do be sure to read up about it to avoid any pitfalls.

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