Why Murphy Used Veto on Bill for Deduction of Sportsbook Bonuses

Why Murphy Used Veto on Bill for Deduction of Sportsbook Bonuses
By Lou Monaco

It’s the week after being re-elected to a second term in a close contest and New Jersey Gov. Phil Murphy (D) has been busy.

Murphy signed 52 bills into law Monday and conditionally vetoed 25, including A-4002/S-2257, which would have allowed sportsbook operators to deduct bonuses from their taxable NJ sports betting revenues.

Back in June, the state Assembly passed A-4002, allowing operators to deduct any promotional gaming credit (PGC) from online sports-betting taxes beyond an annual threshold of $12 million (online), or $8 million (retail, land-based, brick-and-mortar betting).

On Nov. 2, New Jersey residents voted no to permitting in-state college sports betting on teams or events held in the state. It failed 56% to 44%.

No to Mobile but Land-Based OK

Murphy conditionally vetoed the bill, wanting legislators to remove the deduction credit for mobile betting, while keeping the credit for land-based sportsbooks.

“I am concerned that the bill’s parallel tax break for online sports wagering undermines the bill’s laudable goal of ushering in a resurgence of visitors to Atlantic City and our racetracks,” Murphy said in his written veto response. “Given the record performance of online sports wagering operations and the tenuous connection between online wagering and tourism and local economic growth, I am suggesting revisions to the bill to apply the PGC deduction only to the gross revenue tax on non-internet sports pool operations with the hope that the expansion of PGCs will attract new visitors.”

Murphy also suggested removing a provision that required promotional credit to be returned to winning bettors to be eligible for deductions.

“As written, the bill provides that any free bet amounts or promotional wagering amounts qualify for a deduction regardless of any playthrough requirements,” Murphy said. “This provision provides an additional windfall for sports [betting] operators, as they would be permitted to deduct promotional gaming credits that the bettor had little to no chance of winning.”

Currently, operators of top NJ online casinos and sports betting in the Garden State can deduct certain promotional credits from taxable revenue only when they exceed $7.5 million per month.

More than 12 states allow for promotional play deductions from sports-betting revenues, subject to varying restrictions.

Murphy also vetoed A-4297/S-2631, a bill that would have permitted charitable organizations to offer bingo and raffle games remotely, on grounds that regulating the technology involved with thousands of remote bingo games and raffles would be too much of a burden on regulators.

eSports Bill Gets Through

He did sign into law A-637/S-2670, which expands different types of esports events that can be offered for wagering purposes in the state. The new law changes the age requirement to permit betting on any esports events where “a majority” of the competitors are 18 years or older.

Seton Hall University in South Orange has an esports team that recently ranked No. 10 nationally and fourth in the east in last month’s national Collegiate Rocket League event in Midland, Michigan.

It also now clarifies that operators can accept wagers on “any live competition or talent contest, including awards competitions and competitive eating contests” under the definition of “sports event.”

Previously, regulators in the state had allowed some wagering on events such as Nathan’s Hot Dog Eating Contest and the Academy Awards.

Murphy’s opponent in last week’s election, Republican Jack Ciattarelli, officially conceded the election Friday afternoon.



Lou Monaco had been East Coast Scene columnist for Gaming Today in Las Vegas since June 2019, covering the East Coast sportsbook scene with emphasis on NJ and PA. He also currently is a part-time writer for the high school sports department for NJ Advanced Media (NJ.com) in Iselin, NJ. Lou has over 30 years sports experience with previous stints at ESPN SportsTicker, Daily Racing Form and Oddschecker.

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