Happy Thanksgiving from GGB; Newsletter Returns December 4

New Jersey Vastly Overestimated Online Gambling Revenue

The administration of New Jersey Governor Christie administration had projected $180 million in tax revenue from online gambling for the current fiscal year ending in June. The actual figure through February is $4.2 million. That contributed to a shortfall in the current budget and has led the administration to not make a prediction on online gaming this year by lumping it in with all casino taxes.

New Jersey Governor Chris Christie’s rosy projections for the amount of tax revenue online gambling would bring to the state has come back to haunt him at preparations for a new state budget are underway.

The state is projected to end the current fiscal year—which ends in June—with less revenue than projected. The administration says the state will come up short by $251 million. A legislative estimate adds $217 million to that shortfall.

The forecast for the Casino Revenue Fund, which collects taxes from online gambling and Atlantic City’s brick-and-mortar casinos, has been cut by $126 million, accounting for roughly half the state’s revised budget projection, said State Treasurer Andrew Sidamon-Eristoff.

Most of that can be traced to the administrations projection that tax revenue from online gambling—which went live in the state in November—would be $180 million. That was later revised to $160 million.

The tax revenues from online gambling through February, however, has been about $4.2 million.

Sidamon-Eristoff told the Senate Budget Committee at a recent hearing that he remains optimistic that gambling taxes will rise, but acknowledged that the first projections were far too high.

“Clearly, the results so far have not met our expectations,” he said.

There are signs that online gambling revenue is rising.

Legislative budget officer David Rosen told the panel that the tax has generated $4.2 million between the last week of November—when internet gambling started—through the end of February, according to the Associated Press.

He said monthly amounts have been rising from $1.1 million in December to $1.4 million in January and $1.5 million in February. He said he expects that trend to continue and for the state to generate a total of $12 million this year, and $48 million next year.

Sidamon-Eristoff, however, refused to separate online gambling revenue out of the administration’s total casino tax estimate for the coming year.

That led to a testy exchange with state Senator Paul Sarlo, a Democrat who chairs the budget panel, who said he was frustrated with the administration for not breaking out a number for online gambling.

Rosen’s Office of Legislative Services projects that the state has overestimated revenues by a combined $509 million through the fiscal year, according to the AP.