It’s official, New Jersey will become the next state in the US to legalize online gaming and move forward with regulation. Governor Chris Christie signed it into law in anticipation that it would turn around the gaming industry in the state and make it more competitive with others. After seven years of dwindling profits, competitive states taking over gamblers and hurricane Sandy knocking out casino businesses for a week, this has put the Garden State’s gaming revenues into a downward spiral that needs some new revenue streams to pull it back up again.
It didn’t take long for the online gambling bill to actually pass both chambers of the legislature and move on over to Christie’s desk. On the first run submitted over to Christie he rejected the bill stating that he wanted to add a “Conditional Veto” to the bill so they would amend it to his liking. Two concerns of his were the tax amounts that he wanted increased from 10 to 15%, including more player protection and he wanted a “ten year sunset” on the bill so that they could review the law and see if online gaming did indeed work out best for the state. “This was a critical decision, and one that I did not make lightly,” the governor said.
What makes this bill different to Nevada’s online poker bill is that includes all forms of gaming including casinos and poker, excluding sports betting. It also requires online gaming companies to form a partnership with a land-based casino in the state. So the bill really only applies to land-based casinos, but Nevada’s bill doesn’t. It might be worth the online gaming company’s time to look to working with land-based casinos in this bigger than Nevada’s 2 million population with New Jersey’s population at 8.9 million. That’s why PokerStars recently made an attempt to purchase Atlantic Club Casino but could not get approval to complete the purchase in time to close the deal. Furthermore, 888.com has recently joined in with a joint venture with Caesars who owns four Atlantic City Casinos and Bwin.Party has a deal moving forward with MGM and Boyd Gaming. Analysts estimate that New Jersey’s online gaming market would come in at about $450 million.
Now the state is set to publish proposed regulations for online gaming on June 3rd. According to the requirements set by the policy makers or the Division of Gaming Enforcement on Friday, licensees would have to pay an initial Internet gaming fee of $400,000 in addition to an annual fee that would go towards resources for gambling problems. After the June 3rd proposal for regulations, there would be a 60-day comment period for people to review the new regulations through until Aug 2nd. The after review and responding to peoples comments it looks like on the online wagering will start 45 days prior to commencement.
There are more online gaming companies starting to take a serious look at the New Jersey market as well. Paddy Power out in Ireland is another company but will be seriously analyzing the market potential and the cost of getting in to the market to see if it’s worthwhile. Any company would have to consider the cost issues and look at it as a long term marketing strategy in hopes that it would be just the first step in penetrating the entire country eventually. As far as New Jersey is concerned it will be the 12 existing, yet currently struggling casinos that would be the first online. Bwin has a deal with Boyd gaming that is the biggest operator of a land-based casino in Atlantic City. The agreement gives Bwin 65 percent of any joint venture and 10 to 15 percent of any Boyd standalone venture that would be using the Bwin technology.
New Jersey has done the numbers, which is why the legislation was passed in hoping to become the “Silicon Valley” of the online gaming market. The current budget is estimating that gambling will bring in $180 million in taxes and overall will bring in a staggering overall market value of $2.1 billion. In 2014, it’s estimated that the actual tax take will come in at roughly $220 million. Finally, New Jersey will be making sure that there is technology in place that ensures players are playing within state borders; although players do not have to be residents of New Jersey, but they must be playing on a site that is a licensed and regulated casino.