New Jersey Governor signs bill allowing online gambling

“This was a critical decision, and one that I did not make lightly,” Christie said in a statement. “But with the proper regulatory framework and safeguards that I insisted on including in the bill, I am confident that we are offering a responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole.”

Christie conditionally vetoed a bill on February 7 that would have allowed state residents to bet online in games run by Atlantic City casinos. He sent the measure back to lawmakers with recommended changes, including a time limit, a tax-rate increase, and more money for compulsive-gambling programs.
Online gambling in New Jersey could be a us$ 1.5 billion annual business in five years, Dennis Farrell, a casino analyst at Wells Fargo Securities, said in an investor note January 24. “All New Jersey license holders will benefit, but properties with strong brands and gaming facilities will likely see the most upside,” Farrell said.

Casino operators
Borgata Hotel Casino & Spa, a joint venture between Boyd Gaming and MGM Resorts International (MGM), and Caesars Entertainment are the companies best positioned to capture online business in New Jersey, Farrell said.

New Jersey is looking to fend off competition as nearby states opening casinos and others pursue online gaming. Senator Raymond Lesniak, an Elizabeth Democrat who sponsored New Jersey’s bill, has said Internet gambling offers the best chance to do so. Last week Nevada Governor Brian Sandoval signed a measure legalizing such gaming in his state and opening the door for agreements with other states. “The fact that Nevada had moved down this road made it more likely Governor Christie would be tipped over the edge,” said Simon Holliday, director of the U.K.-based gaming research firm H2 Gambling Capital. “Both of them have a vision of getting out there first, becoming some kind of hub for interstate pooling of liquidity.”

Nevada moves
Borgata is the top-grossing single property in Atlantic City, while Caesars is the largest operator with four casinos, according to Bloomberg Industries data.
Casinos licensed in the state must get a permit to offer online betting, according to Lisa Spengler, spokeswoman for the state’s Division of Gaming Enforcement. Third parties that want to offer services through the state’s casinos must obtain licenses, she said. Regulators will announce an official start date, which will be 90 to 270 days from today.

Caesars expects to offer online poker in Nevada this year and in New Jersey in about 18 months, Chairman and Chief Executive Gary Loveman said in a conference call yesterday.

The Nevada legislation prompted a rally in the stock of Zynga, the biggest maker of online social games. The shares climbed 7.5 percent February 25 amid investor optimism that other U.S. states would follow suit and allow Internet gambling.

Christie’s recommended changes included raising the state’s share of bets to 15 percent from 10 percent and establishing a 10-year time limit, after which the legislature would have to reauthorize the bill. The first online bets should be taken by September, Lesniak has said.

Saving jobs
In New Jersey, casino revenue fell 8 % to us$ 3 billion in 2012, the sixth straight annual decline, according to state’s Division of Gaming Enforcement. Nevada gaming revenue increased 1.5 % to us$ 10.86 billion last year, according to Bloomberg Industries data. Lesniak said the legislation will save one or two Atlantic City casinos that might have faced closing, preserving as many as 4,000 jobs. Michael Doherty, the Republican senator who cast the sole vote against the legislation, said the state should follow the example of New York by increasing the tax rate on casinos and allowing them closer to the population centers.

Statements for and against the law
California Tribal Business Alliance (CTBA) Chairman Robert Smith made a statement on the approval of the New Jersey online gaming law: “With the approval of the New Jersey online gaming law, the state, which has typically held to the gold standard of gaming regulations, now unfortunately  appears to be weakening the eligibility requirements needed to obtain a gaming license,” said Smith. “While the local market in New Jersey may be driving these sorts of decisions, in California we cannot allow for reciprocity with states that have lower standards and softer controls opening the doors to questionable corporations, which now appears to be the case in New Jersey. Gaming at all levels should be held to the same, very high standards set for tribal gaming agencies in California. It is in these regulations that are in place to address the nature and the business of the gaming industry, that we maintain the trust in the game and the confidence of consumers and regional governments to promote a safe, fair and mutually beneficial gaming industry.”

While CTBA made a statement against the measure, the Poker Players Alliance (PPA), the leading poker grassroots advocacy organization with more than one million members nationwide and more than 20,000 in New Jersey, today applauds New Jersey legislators and New Jersey Governor Chris Christie for the approval. “New Jersey has gone ‘all in.’ Residents now will have access to a safe and regulated online gaming market, and the state will have a new source for revenue and job creation -- something the federal government has failed to do thus far,” said John Pappas, executive director of the PPA. “The U.S. represents the largest percentage of Internet poker players worldwide, so there is clearly a want and a need for a legal and regulated online gambling market. New Jersey will now serve as a leader in this thriving industry.”