Gambling News

Conditional Veto for New Jersey Online Gambling

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christie-new-jersey-online-gambling-bill-2After waiting until the last possible hour of his 45-day deadline, New Jersey Gov. Chris Christie has slapped a conditional veto on his state’s online gambling legislation, but the conditions are far milder than most people expected. There had been fears that Christie would strike the non-poker aspects of the bill to make it more like the poker-only legislation passed in Nevada, but this didn’t come to pass, allowing New Jersey to officially take point on internet gambling expansion in the US.

Christie says he has “concluded that now is the time for our State to move forward, again leading the way for the nation, by becoming one of the first States to permit Internet gaming. I authorize this step towards modernizing Atlantic City’s entertainment attractions cautiously, with carefully constructed limitations that will ensure the highest integrity and the most robust oversight.”

Christie’s recommendations include a 10-year sunset clause after which future legislators will have the “perspective and opportunity to revise and renew internet gaming as appropriate.” Christie has also recommended that the tax on internet gambling be raised to 15% from the 10% called for under the state’s legislation. The initial cost for being granted an online gambling license would double to $400k and the cost to renew said license would go from $150k to $250k. Christie also wants to change the bill’s language allowing the state to share online gambling with other willing/able states from “an interstate compact” to “a reciprocal agreement,” although the purpose behind this change is unclear.

Christie believes “important questions linger regarding what social impacts will follow the extension of casino wagering across the Internet.” As such, Christie wants to give New Jersey’s gaming regulators “wide latitude and authority to establish a regulatory framework that provides for the most effective controls, monitoring, and supervision.” Christie wants internet gaming licensees to provide funding for problem gambling treatment programs and an annual analysis of the effect internet gaming is having on New Jersey’s gamblers. Christie also seeks a boost in financial support “for other beneficial purposes for which casino gaming was originally authorized.”

Christie wants to prohibit state employees and legislators from working for internet gaming companies, and wants elected officials to disclose “past and present representation of entities seeking or holding internet gaming licenses.” Christie takes issue with what he refers to as the “red-tape and bureaucracy” the legislation would impose on the state’s Casino Reinvestment Development Authority, but these appear to be minor tweaks involving CRDA’s “ability to manage its workforce by statutorily establishing conditions of employment affecting persons transferred to the CRDA by operation of the Tourism District law. Likewise, the bill mandates that certain other actions be taken by the CRDA, such as assessing fees upon certain casino licensees and establishing noise standards within the Tourism District.”

(The Poker Players Alliance has posted the entire 31-page veto here.)

State Sen. Ray Lesniak, who has championed much of New Jersey’s progressive gambling legislation, called it “a big day” and “a huge win after all these years of fighting, and something that can help keep Atlantic City from drowning in red ink.” Lesniak doesn’t believe the 10-year sunset clause would scare off potential licensees. “If it were five years, I think it would have been a concern. Ten years will make investment very attractive.” As for the tax hike, Lesniak told PokerNews it could have “a chilling effect on our ability to market to other states and compete with Nevada in that regard, but we can always change it.” Lesniak said the New Jersey legislature would work swiftly to accommodate Christie’s recommendations and expects to have a revised bill ready for Christie’s signature by March 18. Stocks in gaming firms with operations in Atlantic City are up sharply on Thursday’s news, with Caesars Entertainment up over 13% and Boyd Gaming up around 5% at time of writing.

MGM RESORTS RETHINKS ATLANTIC CITY EXIT
In an interesting side note, the Wall Street Journal reports that MGM Resorts, which famously quit the Atlantic City gaming market in 2010 after the New Jersey Division of Gaming Enforcement declared MGM’s Macau joint venture partner Pansy Ho an “unsuitable” person, plans to ask New Jersey to reconsider its stance, especially since Ho reduced her stake in the JV in 2011. MGM has yet to sell its 50% stake in the Borgata, AC’s most profitable gaming joint, having received several extensions from regulators on the deadline for getting out.

The WSJ’s sources said MGM was motivated by the desire to appear blemish-free as it bids for casino licenses in Maryland and Massachusetts, but Christie’s de facto greenlighting of New Jersey online gambling would definitely sweeten the prospect of returning to AC. MGM has inked an online poker joint venture with Boyd Gaming (which owns the other half of the Borgata) and online gambling outfit bwin.party digital entertainment. Best of all, New Jersey’s online gambling legislation has removed its ‘bad actors’ clause, meaning bwin.party CEO Norbert Teufelberger’s past run-ins with the law won’t be a problem.

Stay tuned for further updates…