Lesniak Introduces Bill That Will Permit New Jersey to Offer Interstate Online Gambling

New Jersey State Senator Raymond Lesniak (D-Union) has introduced a new bill that would further expand online gambling beyond the state’s borders.

Those establishments hosting their websites out of Atlantic City would be permitted to take bets from other states and countries permitting Web gambling.  It is unclear how tax issues would be worked out should such compacts evolve.

Getting other states and jurisdictions to go along with such a compact may not come easy especially with the tax implications and special interest groups such as the horse racing sector and Tribal casinos looking for a piece of the pie.  Utah has already passed legislation allowing them to opt out of any potential plans for federal legislation.

New Jersey Governor Chris Christie signed into law Lesniak’s co-authored measure allowing real money online poker and casino games last year provided the end user is located within the state’s borders.

Lesniak initially promoted his legislation as putting “New Jersey at the hub of an international gaming industry that is expected to experience rapid growth in the years ahead. The plan would help attract international gaming companies to New Jersey, producing jobs, state revenue and economic expansion.

“This could make New Jersey the leader in online gaming,” he said. “We are well positioned to take advantage of a dynamic opportunity to be at the hub of a new business sector with the potential for economic growth and job creation.”

Thus far, legalized online gambling in New Jersey has been met with some degrees of success, however, the numbers have fallen well below initial forecasts.

Figures released last week by the state Division of Gaming Enforcement showed New Jersey’s 15 authorized Internet gambling sites took in $8.4 million between the Nov. 21 launch and the end of the year.

At that rate, Internet gambling would bring in less than $100 million for the year — far less than the $200 million to $300 million many analysts forecast and about 10 percent of the $1 billion in revenue Gov. Chris Christie said he was counting on when he signed the bill legalizing it.

“Everybody needs to take into consideration that this industry is in its infancy,” said Tony Rodio, president of the Tropicana Casino and Resort. “There will be mobile applications, and a lot of the slot content isn’t operational yet.

“I’m encouraged by how many user accounts that people have signed up for and that there’s interest in it,” he said. “You’ll see this grow quickly.”

As of Jan. 12, users had created 155,374 accounts with New Jersey gambling sites, though officials say many users have accounts on more than one site.

Even with Borgata and its PartyPoker arm dominating the market with more than half the signups to date, Gambling911.com has learned that PartyPoker has cut its marketing budget nearly in half for the coming year after failing to meet initial expectations.

Thomas Winter, the Golden Nugget’s vice president of online gambling, said the casino is pleased with its start and is expecting substantial growth of 20 percent per month this year. Right now the casino accounts for 4 percent of New Jersey’s online market, but it expects to win 7 to 10 percent of the market “over time,” he said

Winter, like executives at the Borgata, said online gambling doesn’t appear to be cannibalizing the existing land-based casino’s business, at least so far.

“Slightly more than 50 percent of our online customers were not regular customers at the Golden Nugget or were not customers at all,” he said. Long-range estimates envision that 60 to 70 percent of online players will not be regular customers of the physical casino — creating a marketing opportunity to encourage them to do so, Winter said.

Peggy Holloway, senior vice president of Moody’s Investors Service, wrote in a report last week that Internet gambling “will do little to brighten the fortunes of Atlantic City’s beleaguered gaming operators in the near future.”

“While internet gaming is starting off slowly, the pace of growth will accelerate as issues with payment processing and geo-location technology are ironed out and operators ramp-up their marketing spending to educate consumers that online gaming is available,” she wrote, repeating the firm’s estimate that Internet gambling should generate $250 million to $500 million a year.

- Aaron Goldstein, Gambling911.com and The Associated Press