Gaming Alert – New Jersey Governor Chris Christie Conditionally Supports Online Gambling – Boyd Gaming and Caesars Stocks Rally as a Result

Explore:  Internet Gambling

On February 7, 2012, New Jersey Governor Chris Christie issued a conditional veto of a bill that would legalize online gambling in New Jersey, but indicated that he would approve the bill if a few changes were implemented, including an increase in the tax rate from 10% to 15% and the inclusion of a provision that would allow the legislature to reevaluate the bill after 10 years. The legislature is expected to promptly incorporate these revisions and resubmit the bill to Governor Christie in mid-March. This signifies a significant step forward for online gaming in New Jersey and throughout the U.S.

The current draft of the bill, among other things, authorizes Atlantic City casinos to operate online gambling websites accessible to people physically located in New Jersey and permits the online playing of any game currently offered within the casinos. The bill also contemplates some form of reciprocity with other states where online gambling is legal, such as Nevada and Delaware.

In March of 2011, New Jersey’s first attempt to legalize online gambling was vetoed by Christie. The latest bill, however, was revised to address many of the Governor’s earlier concerns, including a provision authorizing substantial fines to anyone who runs or advertises illegal back-room Internet betting parlors. Additionally, in Christie’s conditional veto he recommended strengthening the regulatory role of the Division of Gaming Enforcement and providing more funding for gambling addiction treatment.

If the bill is enacted, New Jersey will become the third state to legalize online gambling, joining Nevada and Delaware. Those land based operators, such as Caesars Entertainment Corp. and Boyd Gaming Corp., who have invested significant capital in to this space to prepare for the expansion of online gaming, have already seen the benefit of this ruling with significant upticks in their stocks last week upon the release of this ruling by Governor Christie.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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