Senate Passes S1565: Internet Casino Gambling May Become a Reality

The move towards legalizing online gambling in New Jersey gained momentum this week when a Senate Committee passed S1565, which would authorize casinos in Atlantic City to set up Internet gambling access for their patrons.

Specifically, S1565 provides, most pertinently:

  • all games, including poker, which may be played at a casino, as well as variations or composites thereof, may be offered through Internet wagering;
  • all equipment used by a licensee to conduct Internet wagering must be located either in a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City and all Internet wagers will be deemed to be placed when received in Atlantic City by the licensee regardless of the player’s physical location within this State; any intermediate routing of electronic data in connection with a wager will not affect the fact that the wager is placed in Atlantic City;
  • in order to participate in Internet wagering, a player must be physically present in New Jersey whenever a wager is placed by that player;
  • there is imposed an annual tax on Internet wagering gross revenues in the amount of 10% of such gross revenues which will be paid into the casino revenue fund; the 8% tax on casino gross revenues will not apply to Internet wagering gross revenues; and the investment alternative tax will apply to Internet wagering gross revenues, except that the investment alternative tax on these revenues will be 5% and the investment alternative will be 2.5%, with the proceeds thereof used as provided by law;
  • procedures for the crediting and debiting of a wagering account;
  • it will be lawful for a casino licensee to provide marketing information by means of the Internet to players engaged in Internet wagering and to offer those players incentives to visit the licensee’s casino in Atlantic City;
  • required features of Internet wagering to assist the wagering account holder;
  • required features to assist problem gamblers and potential problem gamblers;
  • penalties for violations of the provisions of the bill;
  • an annual fee for Internet wagering permit holders for the initial permit and permit renewal to cover the costs of regulation, with the initial fee to be at least $200,000 and the renewal fee to be at least $100,000; and
  • an annual fee for Internet wagering permit holders of $100,000 to be allocated to programs to prevent compulsive gambling and to assist compulsive gamblers.

The Bill also provides that the Division of Gaming Enforcement will adopt regulations for the implementation and conduct of Internet wagering that are consistent with regulations governing casino gambling generally.

The Bill was amended to its current form to address concerns voiced by Governor Christie last year over the constitutionality of a similar proposed measure, which he ultimately vetoed.

To read S1565 in its entirety, go to:

http://www.njleg.state.nj.us/2012/Bills/S2000/1565_I1.HTM

Push back is allegedly coming from the horse racing industry, whose representatives asserted at the hearing on Tuesday that their exclusion from the Bill will result in the loss of millions of dollars in revenue that can potentially be generated by Internet gambling. Thomas Luchento, President of the Standardbred Breeders and Owners Association of New Jersey claimed that the Bill supports one industry at the expense of another. Noting that patrons could come to the racetrack with their laptops and gamble online without wagering on the horses (thereby allowing for gaming on the premises with no profit for the tracks), Luchento argued, “Why is it different if I have [an Internet gambling] room at the racetrack?”

State Senator Jennifer Beck (R-Monmouth), whose County is home to Monmouth Park, is an avid supporter of the horse racing industry. She said that sought a way for the racetracks to share in the potential revenue, but the options are not likely to survive a legal challenge or Governor Christie’s veto.

The matter will now head to the Senate floor.