New Jersey sees progress on Internet gambling

13 December 2010
By Chris Sieroty

TRENTON, New Jersey -- As time is quickly running out for Senate Majority Leader Harry Reid, D-Nev., to find bills to attach his online poker legalization measure to before the end of the current congressional session, efforts to approve online gaming in New Jersey are moving forward.

The state Assembly Regulatory Oversight and Gaming Committee has passed a dozen different bills related to the state's gambling and horse racing industries, including a bill that would legalize online gambling for residents of the state.

The online gambling bill, authored by Democratic state Sen. Raymond Lesniak, was expected to be voted on by the entire Assembly by the end of the year, after which it would go to the desk of Gov. Chris Christie for his signature.

On Nov. 22, the state Senate passed Lesniak's Internet gambling bill by an overwhelming 29-5 margin. Michael Drewniak, a spokesman for Gov. Christie, on Friday declined to comment on pending legislation.

The New Jersey online gambling bill would not change the legality of online gaming for most of the United States. The bill would set a tax rate of 15 percent on Internet gambling revenue in New Jersey.

Lesniak said if legalized, online gambling would generate $210 million to $250 million in annual gross revenues for the state. He said the measure would also create 547 well-paying jobs, along with an additional 1,039 jobs in positions that supply products and services to online gaming companies.

Dale Erquiaga, a senior adviser to Gov.-elect Brian Sandoval, said Sandoval supports federal efforts to legalize online poker, but there have been "no discussions of doing it on the state level" if Reid's efforts were to fail.

Gaming industry analysts and company executives believe New Jersey's efforts could have an impact on the national debate over online gambling.

"If this passes it could be a tipping point for online gambling," said David G. Schwartz, director for gaming research with the University of Nevada Las Vegas. "They've already showed that casino gambling could be regulated and successful outside of Nevada."

Schwartz said he expected Nevada-based gaming companies with New Jersey properties to get involved with online poker if the measure becomes law.

The bill continues to make its way through the Legislature despite opposition from Caesars Entertainment Corp, formally Harrah's Entertainment Inc., which has four casinos in New Jersey. Caesars has come out in support of a federal measure, which is stalled in Congress.

"We are monitoring the progress of the legislation closely. However, it is premature for us to comment on potential plans before a final bill has been passed and signed into law," said Boyd Gaming Co. spokesman David Strow. Las Vegas-based Boyd Gaming operates two resorts in New Jersey.

Penn National Gaming Inc. operates Freehold Raceway in New Jersey and recently purchased the debt backed by the M Resort in Henderson for $250 million. Joe Jaffoni, a spokesman with Penn National, said it was a little too early in the process to comment, but added that if it were legalized, "we would consider it."

New Jersey lawmakers also approved a resolution that will ask voters next year to decide whether sports betting ought to be legalized in New Jersey.

"Sports gaming is a bit of a harder sell. Poker is probably a good place to start," Schwartz said.

He cited the Professional and Amateur Sports Protection Act passed by Congress in 1992 as an obstacle to legalizing sports betting in New Jersey. The bill basically outlawed sports betting nationwide, except for sports lotteries in Oregon, Delaware and Montana, as well as licensed sports books in Nevada.

Schwartz said poker accounts for about 1 percent of the $10 billion in total gaming revenues annually in Nevada.

"You never know, it could take off if online gaming becomes legal," he said.

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