Exclusive: New Jersey to open egaming in September

New Jersey will become the first state in the United States to offer regulated intrastate online gambling as soon as September this year after Senator Raymond Lesniak exclusively revealed to eGaming Review that he expects both houses to pass his bill in nine days time, followed “shortly” by the signature of Governor Chris Christie.

Lesniak told eGR last night he was confident his legislation would pass both the Assembly and the Senate and that it would be signed by the Governor without the need for a referendum after gaining his full support to allow the state to become the “blueprint” for internet gaming in the United States.

When asked whether Nevada would be first past the post after announcing a poker-only bill and currently processing applications, the Senator said: “The blueprint is going to be established by the state that gets it up and operational and captures market share first and that’s going to be New Jersey.

“I expect that my legislation will pass both houses ““ the Assembly and the Senate ““ on 15 March which will authorise intrastate online gaming in New Jersey and that it will be signed by Governor Christie without the need to go through a referendum to amend the constitution.

“We have a very well-established regulatory system that has been operating well for decades so it won’t take long to issue licences to our casinos and we have met with many investors who are ready to go and anxious to move ahead,” he added.

Christie originally vetoed Lesniak’s egaming bill in March last year due to concerns, among others, that it had the potential to expand gambling outside of Atlantic City in breach of the state constitution, however Lesniak told eGR that the Governor has now been “convinced” following talks with the Senator and after seeking expert legal advice.

“The Governor has been convinced, as I was last time I put it through, that our constitution does not require it, that it’s an already existing form of gaming approved under our constitution and this is not a new form of gaming but a new vehicle as to how to place a bet.

“Governor Christie has received an opinion from a constitutional law authority that agrees with my legal opinion, plus now that other states are rushing to the forefront to take the lead on this it has created a sense of urgency that wasn’t there in the past and that would be jeopardised by waiting until November which we would have to do to get an amended constitution. Those two things combined, and the support of the casino industry in New Jersey, other than Caesars, all came together to get this going now and to get the Governor to support it as is,” he said.

Following Christie’s official seal of approval Lesniak said the state Casino Control Commission would immediately begin developing and publishing regulation as to how and under what conditions internet gaming licences will be granted, as well as what security measures have to take place. Once that process ““ one that it has years of experience of in the land-based industry ““ is completed it will then open up the licensing application process and look to process its first online bet as soon as this autumn.

“That’s a process that doesn’t happen overnight, that will take months but we’re very experienced at this and this isn’t new to us. An aggressive timetable would have us up and operational… certainly I would expect us to be up and operational by September 1st for sure.”

Lesniak’s S1565 bill, co-sponsored by fellow Democrat Jim Whelan, authorises “internet wagering” via the state’s 12 Atlantic City casinos. This includes any game, including poker that is currently operated by casinos as well as “ancillary games”. Each of the 11 casinos, including properties owned by Caesars and Donald Trump, would then apply with some smaller companies potentially partnering, according to Lesniak.

Each licensee would pay an annual 10% gross revenue tax, plus an additional licence “issuance fee” based on the cost of investigation of “not less than US$200,000″ as well as a renewal fee based upon the “cost of maintaining enforcement, control and regulation of internet wagering operations and shall be not less than $100,000″.

Lesniak added that once the state was operational it would “reach out to other states to say ‘compact with us'”. “There aren’t many states that can do the same, certainly California can, maybe Illinois and Florida. There aren’t too many states that have the resources and the ability to set up an operation like this, but there will be others that will want to get some of the revenues from this so we’ll be looking to welcome those states on board to join our licensing and our internet activities,” he added.

Bill S1565 advanced out of Senate Committee by a 3-0 vote earlier this week, however a clause in the original bill handing out a portion of revenues to subsidise the state’s US$1bn earning horse racing industry was absent from the new proposals.

Lesniak said he expects to face opposition, and a possible lawsuit, from horse racing groups, admitting that the state’s horse tracks were “legitimately upset” about the decision to remove a clause allowing them to gain purse subsidies from revenues generated by intrastate internet gaming. However, he added that he hoped to “talk them off that ledge” before any legal action, that has the potential to derail its bid to become to become the first state to offer egaming, is taken.

“I’m a big supporter of the horse racing industry and they have legitimate needs we need to address. I certainly I hope I might be able to at least sooth some of their concerns. They’re both vital industries and I’m hopeful we can get the horse racing industry to understand that the best course is to work with us, rather than against us.”

One proposed solution, he explained, could be the introduction of a regulated sports betting market in New Jersey, a federal law Lesniak is currently attempting to overturn in court following a successful state referendum in November. A shorter-term proposition, however would be to convince legislators and the land-based casino industry to allow slot machines and casino gaming at state racetracks, a measure several other states have already implemented. For this to happen, however, he said the state’s casinos “need to wake up”.

“Now that the casinos are going to have this very significant source of revenue I think there are other options we can look at to help the race tracks and to keep both industries growing in New Jersey. “Some time in the future they’ll have some slots on the racetracks, probably joint ventures with some of our casinos. That’s a win-win solution. I’ve been promoting that for years.

“At some point our casinos will wake up and understand that that makes sense for them, to get a percentage of the revenues from operating a casino at our racetracks as opposed to those revenues going to Pennsylvania and New York and Delaware where they’re now going.

“Why not get a percentage of something rather than no percentage of the bigger pot that’s going elsewhere? Our casinos haven’t reached that point where they understand it. Some of the owners do, but most of them do not. At some point in time they’re going to have to wake up and understand that’s the way to go.

For the full interview look out for the first issue of eGaming Review North America at the end of March.