New Jersey’s online gamblers to triple in 2014

Monthly revenues from Internet gaming also leapt ahead, totaling USD 9.5 million in January, up 28 percent from USD 7.4 million last December. A total of 2.5 percent said they already had played the sites since they became legal in November, but 7 percent said they intended to do so in the coming year.

Gamblers say they feel comfortable playing on regulated sites where they know they’ll get their money. And the buzz among politicians and analysts is that online gambling, if New Jersey plays its cards right, could attract billions in revenue and thousands of high-tech jobs to the state. Also, the state levies a 15 percent tax on online gambling revenue versus the 8 percent tax on revenues from brick-and-mortar casinos.

Senator Raymond Lesniak already has introduced a bill that would open New Jersey’s sites to players in other states and to the us $33 billion worldwide online gaming market. Nevada, Delaware, and New Jersey are the only states that now allow online gaming; Nevada offers only online poker while Delaware and New Jersey offer all games online.

The U.S. doesn’t allow the world access to its residents when it comes to online gambling. The three companies were alleged to have violated the Unlawful Internet Gambling Enforcement Act of 2006, which prohibits the transfer of money for any game prohibited by federal or state law. So PokerStars and Full Tilt stopped offering play for money—and still don’t. Other sites pulled out of the American market.

“The offshore sites aren’t big names anymore,” said Rich Muny, vice president of player relations for the Poker Players Alliance, which has a million members, 25,000 of them in New Jersey. “We’re really seeing them get pushed out of the marketplace by the licensed and regulated games, as it should be. “We would all rather play on the domestic sites because it benefits us as consumers,” he added. “Now a disgruntled player can go to a regulator if there’s a dispute with the site over billing or any issue.”

Under current law, only people located inside the state can play on its sites. Even that wasn’t allowed until three years ago when the U.S. Department of Justice offered a new interpretation of the Interstate Wire Act of 1961, which prohibits the use of wires to place bets. In 2011, however, the department opined that the law only applies to sports betting and does not apply to Internet gaming within a state.

If online gambling remains restricted to those who play within New Jersey, it probably will be a us$ 266 million annual industry starting with its first full year, according to Adam Ozimek, senior economist at Econsult Solutions. “From the perspective of New Jersey, it’s important to think about the revenues’ potential for supporting jobs,” he said.

According to Roger Gros, publisher of Global Gaming Business Magazine, online casinos that have operated in other jurisdictions already have moved to Atlantic City. So, too, have related companies, such as payment processors and those offering geolocation services.

“Instead of being in Gibraltar or the Isle of Man, some online gaming companies will rather operate out of Atlantic City and be at the hub of an Internet gaming operation,” he said. “Our regulatory system is more stable. Strange as this may sound, our political system is more stable, too.”

Online gambling is the biggest sea change in Atlantic City since 1978 when the Chalfonte-Haddon Hall Hotel became Resorts International and opened as the first legal casino in the eastern United States.

Last year, revenues for the then-12 Atlantic City casinos—Atlantic Club closed last month—fell below $3 billion for the first time in 22 years, according to the Associated Press. The well-known slide is due to competition from an increasing number of casinos in neighboring states in recent years.
In New Jersey now, experts say, there are as many online poker players as there are casino players who like electronic slot machines and table games like video poker and blackjack. But poker is a low-margin game both on land and online. There’s much more money to be made on the other games, which require much less skill.

In fact, 70 percent of land-based casino revenues come from slot machines, according to a study from Oregon State University-Cascades.“Online casinos want more casino players,” Gros said. “That’s where the future will be for online gaming in New Jersey and in the U.S.”

Industry analysts say online gambling on all the games can help New Jersey’s brick-and-mortar casinos by creating new players for those games and by promoting Atlantic City as a destination.“Online poker is good for everybody,” Gagliano said. “The sites give people who want to try the game a chance to play for not a lot of money or even for free. Everything is available. You can also play thousands of dollars.”

Muny said some women have told him they feel less intimidated playing online.“Nobody makes fun of their moves as they’re learning,” he said. “Online, you can always turn off the chat if you don’t want to hear what everybody has to say.”

Already, however, some gamblers are traveling to New Jersey to play online. Brandon Shane, 28, of Ohio is a case in point.
Lesniak wants to open the New Jersey online gambling market even wider. His recently introduced bill, S980, co-sponsored by Sen. Jim Whelan (D-Dist. 2), would do three things. First, it would allow New Jersey to enter into agreements with other states that allow their residents to play on New Jersey sites, another move made possible by the U.S. Department of Justice interpretation of the wire act.

Second, the bill would allow New Jersey to enter into agreements with other countries so their residents can play on New Jersey sites. (According to a survey by GamblingCompliance, nine other states are now considering legalizing or expanding Internet gambling—California, Colorado, Hawaii, Illinois, Iowa, Louisiana, Massachusetts, Mississippi, and Pennsylvania.)

Third, the bill would require payment processors to be licensed by the state, a move Lesniak hopes will give banks confidence to allow their credit cards to be used. “That alone would give a boost to the current Internet gaming sites,” the senator said.

If New Jersey allowed its online gambling sites to open to other domestic and global markets, annual revenues could go into the billions, according to Ozimek. And as many as 16,000 new jobs will find their way to New Jersey.