The New Jersey Online Gambling Bill Saga

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On February 26 2013 New Jersey Governor Chris Christie signed an online gambling bill passed by both houses of the legislature, thereby converting it into law. The pathway was a long and tortuous one and this article outlines what can only be called The New Jersey Online Gambling Bill Saga.

The origin of this online gambling saga in New Jersey can be traced to January 2010 when Democrat Senator Ray Lesniak introduced a bill that would Atlantic City casinos to offer online versions of their games, such as poker, blackjack and baccarat, in New Jersey and outside the United States. In June 2010 the bill was passed by the State Senate Wagering, Tourism & Historic Preservation Committee. Almost immediately differences began to be aired in the public domain. The Casino Association of New Jersey opposed state regulation of online gambling and wanted it at the federal level. The racetracks wanted to be allowed to offer slot machines at their venues. There were conflicting legislative bills in the state Senate and Assembly. Senator Lesniak stated that all sectors of the gambling industry were in trouble and were trying to gain advantage at the expense of others. However, he agreed to hold his bill till all issues had been discussed and some consensus obtained.

Thereafter the bill cleared the Senate Budget and Appropriations Committee in November 2010. The bill was expected to be passed by the full Senate by the end of the year. Senator Lesniak pointed out that revenues and jobs were going to offshore international gaming operators. Legalized and regulated online gambling in New Jersey would divert those revenues and jobs to the state. In January 2011 the bill was also cleared by the New Jersey Assembly. The bill was sent to Governor Christie for signature and New Jersey was set to become the first American jurisdiction to legalize online gambling. But in March 2011 Christie vetoed the bill. He praised the intent of the bill but said that there were lacunas in the bill. He said that locating the servers of the online gambling operators in Atlantic City casinos did not meet the New Jersey constitutional requirement that casino gambling has to be restricted to Atlantic City. He objected to the possibility of commercial establishments outside Atlantic City offering online gambling. Senator Lesniak responded by stating that he would work with the Governor’s office to get online gambling running as soon as possible.

In August 2011 Senator Lesniak introduced another online gambling bill after addressing the concerns raised by Governor Christie. The movement was much slower than expected. It was approved by the required Senate and House committees only in April and May 2012 respectively. However, it was felt that at that time there was not enough support for the bill and hence voting in the Senate and House were deferred. The horse racing lobby was still against legalization of online gambling in New Jersey and they wielded sufficient clout. There was also the problem of slightly different versions of the bills in the House and Senate and hence harmonization would be required.

Finally in December 2012 a harmonized version of the online gambling bill was passed through the New Jersey House and Senate. From December 2012 to February 2013 Governor Christie kept everyone guessing as to what he would do. Then early in February 2013 he sent the bill back with a conditional veto. He asked for the tax rate to be increased from 10% to 15% and that the bill should have a 10-year trial period. The conditional veto was appreciated by the industry and saw a surge in the prices of the listed online gambling companies. The New Jersey legislators got to work immediately and the amended bill was passed in the Assembly and in the Senate on February 26. In less than an hour later Christie signed the bill into law. By this time Delaware had legalized intrastate online gambling and Nevada had legalized intrastate online poker. It could take another nine months or so before online gambling becomes a reality in New Jersey.

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