N.J. Again Passes Online-Poker Bill; Decision Now in Governor’s Hands

by Ifrah PLLC

New Jersey could soon become the third state to legalize online gaming within its borders. Its State Senate on December 20, 2012, voted 33-3 to legalize online poker in the state. The General Assembly had previously approved the bill by a vote of 48-25-3. The bill was able to achieve significant bipartisan support in both houses of the state legislature. The bill will now be sent to Gov. Chris Christie.

“If New Jersey’s casinos wish to compete in the 21st century, we have to give them the freedom to adapt a 21st century marketplace,” said State Senator and sponsor of the bill Raymond Lesniak.

This is the second time that the New Jersey legislature has approved an online poker bill. Last year, Gov. Christie vetoed an online poker bill that had been approved by large margins in both the General Assembly and State Senate.

If the bill is signed by Gov. Christie, New Jersey will become the third state, along with Nevada and Delaware, to legalize online poker. The District of Columbia also did so, but later repealed the law.

Last year in his veto message, Gov. Christie said he had “significant concerns” with the legislation, especially the expansion of casino gaming outside of Atlantic City. The New Jersey state constitution restricts gaming to Atlantic City, with exceptions for horse racing and the lottery. Under this bill, all Internet gaming would be deemed to have taken place in Atlantic City and all equipment used to operate online gambling must be located in Atlantic City, with the exception of backups and a few other items. Since no online bet would be completed until a server in Atlantic City accepted the wager, all bets will take place in Atlantic City.

Last year Gov. Christie also took issue with the subsidy that the bill would give to the state’s racetracks, but those were dropped in this bill.

Also in the time since Gov. Christie vetoed the bill last year the U.S. Department of Justice reversed a long held position and stated that the Wire Act only applied to online sports betting. This opinion by the Department of Justice would allow for individual states that have legalized online gaming to form a compact to allow for bigger player pools and the possibility of generating additional revenue.

There was debate in the state Senate on allowing the state’s racetracks to participate in hosting gaming as well. Sen. Mike Doherty (R) sought more information on why the state’s racetracks could not be allowed to offer online gaming instead of just the state’s casinos. Sen. Lesniak said he would work toward the goal of bringing online gaming to the state’s racetracks.

Sen. Lesniak pointed out that the bill is about job creation and keeping the tax rate lower will help attract companies to the state and allow for the state to become the “Silicon Valley” of online gaming. Sen. Lesniak said he believes that this bill could pump a couple hundred million dollars into the casino industry in Atlantic City. In a statement released after the bill was passed Sen. Lesniak said, “This bill will mean more jobs, more revenues for our casinos, more tax revenues for worthy programs . . . and a healthier gaming industry in the Garden State.” .

This bill protects the interests of New Jersey’s casino industry by requiring that iGaming be offered only through brick and mortar casinos in Atlantic City, which may either offer online gaming independently or in partnership with an iGaming vendor. Revenues generated by online gaming would be taxed at 10 percent of gross gambling revenues.

In addition, the bill also outlines permit fees, provides for contributions to support those affected by compulsive gambling, regulates the process for the placing of Internet wagers, and provides penalties for violations of the law.

Under the bill, casinos or their affiliates would be allowed to offer the same games that are currently offered on Atlantic City casino gaming floors. All players must be physically located in New Jersey.

Thus far, there has been no public indication from Gov. Christie regarding his plans for the bill. Gov. Christie now has up to 45 days to act on the bill. He can sign it into law, veto it, or stand aside and allow the bill to become law because he did not veto it.

We are happy to see that the New Jersey legislature has passed an online gaming bill and we support New Jersey’s efforts to legalize online gaming in the interests of bringing jobs and revenue to the state.


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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