By Douglas Mishkin (*)

New Jersey Gambling Referendum – Take Two

Douglas Mishkin is the senior vice president for legal affairs and business operations at Metric Gaming, a B2B sports betting software and services provider. Metric is currently rolling out a mobile-optimized sportsbook platform built to accommodate both traditional sportsbook content and the company’s flagship SuperLive markets (enabling instant gratification betting such as whether a goal will score in the next sixty seconds, or a golfer will sink an imminent birdie putt), as well as various other unique betting products designed to enhance player engagement.

United States 
| 06/04/2016

It’s been nearly five years since the citizens of New Jersey voted to amend their state constitution to legalize sports betting. Because the resulting legislation directly violated federal law, however, that effort to boost the state’s economy (leveraging its existing casino and racetrack infrastructure) was snagged in the New Jersey federal court system, culminating most recently in a February 2016 rehearing by the Third Circuit Court of Appeals. While a decision there is still pending, by all accounts the court is unlikely to overturn its previous ruling against the state, and New Jersey will be back where it started.

But New Jersey voters will soon be presented with another gambling-related referendum, this time to amend their state constitution to permit casino expansion outside Atlantic City - which has had a monopoly over the business since 1976. Specifically, the proposal would allow for two new casinos in two separate New Jersey counties, each one separated from Atlantic City by at least 72 miles. Unlike the sports betting referendum, the legislation contemplated would at least be legal under federal law. It may, however, prove no less controversial.

As explained by New Jersey Senate President Steve Sweeney when he first unveiled the proposal several months ago, “expanding gambling to North Jersey is the best way to revitalize an industry that is important to the state's economy so that we can compete with neighboring states, generate the revenue needed to revive Atlantic City and contribute to economic growth." The legislation would seek to accomplish these objectives by providing closer casino options for more New Jersey residents (who are currently crossing state lines to gamble), creating thousands of new jobs for the state (both in temporary construction work and permanent casino positions) and generating revenue for the flailing Atlantic City (sourced from taxes paid by the new casinos). As it stands, Atlantic City’s casino revenue is down more than 50% since 2006, and in 2014, four of the city’s 12 casinos went out of business.

But key details of the referendum – which will be presented to voters in November – remain unresolved, namely the casinos’ locations, tax rates and owners. This uncertainty reflects ongoing debate within the state legislature, as officials cannot even agree on the measure’s supposed benefits. In March, Atlantic City’s mayor Don Guardian voiced his concerns that the new casinos would bring crime, while also noting that the new in-state competition would only further cripple his city, now on the verge of financial collapse. Others point simply to the rapidly declining Atlantic City casino business as clear evidence that any new casinos in the state are unlikely to succeed.

Meanwhile, should New Jersey approve expansion and put new casinos near its borders, hundreds of millions in casino revenue could be lost by New York. The New York Gaming Association has accordingly issued a statement that “[n]ew casinos in northern New Jersey would present a significant threat to New York’s gaming industry, risking hundreds of millions of dollars in critical education revenue and jeopardizing thousands of family-sustaining jobs,” further noting that it must “take the necessary steps to preserve our market.”

Facing daunting political headwinds and substantial legislative hurdles, New Jersey’s latest gambling referendum seems poised for yet another contentious, drawn-out struggle – one that the state can only hope is resolved more quickly and favorably than the last one.

By Douglas Mishkin

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