Update from New Jersey: Bill passes Senate

Senate approves S490 on a positive 29-5 vote

Late on Nov. 22, the New Jersey media reported that a bill on online gambling legalization in the state, S490, has passed the state Senate. The bill was approved by the committee merely two weeks before the Senate gave its consent on a 29 to 5 vote; it will now be sent to the state House of Assemby for further committee consideration.

This new development opens the possibility of intrastate internet gambling on poker and casino games, whereas the question of sports betting legalization will be solved by voters in 2011 if a federal ban is judicially overturned.

This bill, which was sponsored and advocated by Democrat state Senator Raymond Lesniak, may turn New Jersey into the first state in the US to legalize and tax intrastate online gaming, which could put the federal government’s online gambling ban to a test. However, even though the federal law doesn’t allow gambling across state lines, S490 provides a system for only state residents — and foreign gamblers — to place bets online.

In addition, the bill was amended to allow residents of other countries, but not other U.S. states, to wager through suggested online gaming websites operated on servers based in Atlantic City. According to lawmakers, it is possible to prevent out-of-state players from gaining access to New Jersey’s system.

In case the bill is adopted, one-year renewable licenses will be issued to online casino operators, who would have to pay $200,000 for the first year and $100,000 to renew the license. The taxation imposed on the operators would probably be 15 percent, despite the originally planned 20 percent. Also, a share of the proceeds will go toward helping the state's battling horseracing industry, reducing the need for government subsidies.

On this occasion, Senator Lesniak told the press that all computer servers, equipment and other support services and companies for the online gaming industry would by law have to be located in Atlantic City.

“That’s a no-brainer, and the whole bill is a no-brainer. We need to be bold, to tell the federal government it has no constitutional authority to prevent online gaming here in our state," he said, adding that there is a provision according to which licensees will fund the state Department of Human Services compulsive gambling treatment and prevention programs at a cost of $100,000 per year.

The Senate also passed another bill crucial for the liberalization of gambling in New Jersey, in the form of a measure asking for voters’ opinion whether the state should allow betting on sports events. The Senate Economic Growth Committee passed the bill on the vote 6-1, allowing it to receive future consideration by the full Senate.

If it meets the voters’ approval, the Legislature would be authorized by a constitutional amendment to enact laws allowing betting at casinos in Atlantic City and at racetracks, including former racetracks, on sports or athletic events.

Lesniak put a particular stress on the records from racing and casino operators in Delaware, where allowing sports betting had boosted profits. Based on the resolution, the referendum in question would be held in November 2011, but a federal ban on sports betting in all but four states would have to be overturned first.

According to the Press of Atlantic City, Lesniak is at the moment pursuing a case against the federal government to overturn a ban on sports betting on constitutional grounds, claiming that it fails to treat all states equally. Namely, New Jersey was offered a chance to allow sports betting in 1991 but the government at that time declined.