What Happened?
A New Jersey online gambling bill, which would allow bettors in the state to play games offered in casinos through online platforms, has been approved by the state Assembly and Senate, and is awaiting approval by the governor. The law would increase revenue for casinos which deploy online gaming capabilities, boosting economic activity in Atlantic City where casinos are significant contributors to financial growth.
So What?
Under the New Jersey state constitution, gambling is illegal outside Atlantic City limits. Lawmakers are determining if the online gambling bill would infringe on this law and require an amendment to be passed, despite the online portals being run by casinos within Atlantic City. In 2011, a similar bill was vetoed by Governor Chris Christie because he felt it did violate this rule as well as potentially harm efforts to boost Atlantic City tourism.
In response to debates over the constitutionality of the bill, the legislation calls for all hardware and software managing the online gambling features to be housed within Atlantic City casinos, and any vendors of these resources to obtain a casino service industry enterprise license. Proponents of the measure argue online gambling could enhance land-based gaming, reach more bettors and drive traffic to Atlantic City casinos. The bill will become law by February 4 if Governor Christie chooses not to veto the measure.
Nevada’s Proposal
Another online gaming bill has been introduced to the Nevada General Assembly that would allow the Nevada governor to create interstate gaming compacts with other states to drive revenue and regulatory consistency. Because online gaming has not been deemed legal by the U.S. Department of Justice or Congress, previous legislation prohibited online gaming licensure in Nevada. The new proposal, however, would allow the governor to create contracts with states that allow online gambling, removing the requirement for Nevada to participate only if online gaming is legal under federal law. Nevada is currently the only state in the country with established online poker regulations to prevent underage betting or other violations.
Benefits of Online Gaming
In a piece for the Reason Foundation, Steven Titch explains what states and cities have to gain with the approval of online gambling such as:
- Increased employment opportunities in the IT industry
- Boosted revenue opportunity for state governments through a new ecommerce channel
Regulatory Recommendations
Titch also outlined some principles that should be in place to efficiently regulate online gambling activities and optimize profitability based on successful implementations in Europe and other regions. The report suggests cities or states:
- Create a competitive environment
- Draft different cost structure for online gambling compared to land-based casinos
- Avoid taxing online bettors’ accounts, rather enforce requirements for players to report winnings as income to avoid double taxation issues
- Maintain consistent tax structures on casinos operating online gaming platforms to drive revenue
Supreme Court Ruling
In late 2011, the Supreme Court in Washington, DC, handed down an opinion clarification that the Wire Act of 1961 does not apply to non-sports online gambling.