New Jersey May Allow Overseas Online Gambling

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Wednesday, January 22nd, 2014 | Written by Lucy Brown

Having been instrumental in introducing online gambling to New Jersey, State Senator Ray Lesniak is now seeking to increase the scope of those games by re-introducing a bill that would allow licensed online gambling operators to offer their products to people located outside of New Jersey, or even the United States.

New Jersey to offer products internationally

Presently, only persons located within New Jersey’s borders are able to access and play on its online gambling sites, but bill S980 would allow gambling companies with servers in the state to reach deals with other legalized and regulated internet gambling jurisdictions. In so doing, it is believed online businesses will then be able to increase their player pools and therefore thrive in a more viable industry.

NJ Senator Raymond Lesniak’s original bill S890 was actually first introduced to the state legislature in November, 2013, but has since been amended to remove sports betting from its provisions. At the time of S890’s initial introduction, Lesniak expressed high hopes that the bill would play a major role in reviving New Jersey’s ailing gambling industry, and explained that it “would put 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.”

In effect, Lesniak’s bill would then make the New Jersey Division of Gaming Enforcement play a similar role to gaming industry regulatory bodies, such as the ones located on the Isle of Man, Malta, Gibraltar, Alderney and Curaçao. However, Lesniak said New Jersey would provide a greater level of stability and credibility for gaming companies than the jurisdictions already mentioned.

Details of bill S980

According to latest reports, bill S980 would not allow for the sharing of players between different US states, but would instead permit gaming companies “Restricted Foreign Internet Wagering.” As Lesniak then goes on to explain; “right now, federal law would preclude international players playing online against New Jersey players.”

More details on the proposed bill are expected to be revealed over the coming months, as it is discussed by lawmakers. Meanwhile, it has been proposed that Restricted Foreign Internet Wagering (RFIW) permit holders would have to pay a $100,000 non-refundable deposit for a license, a one-off $200k fee, as well as further $100k each year as a renewal fee. In addition, foreign gross gaming revenues would be subject to between 10% and 15% tax.

Touting the potential benefits of the proposed legislation, Econsult Solutions representative Adam Ozimek, said that international gambling could generate around $5 billion in revenues each year for New Jersey, and that up to 16,000 new jobs could be created.

“This could make New Jersey the leader in online gaming. 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.”

Hurdles to Overcome

Nevertheless, there are still some significant hurdles to overcome before such a wide ranging piece of legislation is accepted, not least, Governor Christie could potentially veto the bill. Furthermore, the World Trade Organization may also oppose the unilateral proposal, the key contentious issue being that although New Jersey could offer gambling to overseas players, other countries may not be able to offer gambling to New Jersey residents.

Furthermore, NJ State Senator Ray Lesniak may be overestimating the benefits and enthusiasm foreign operators would have in being placed under New Jersey regulation, rather than already existing offshore jurisdictions.

Current state of New Jersey online gambling

At the end of November, New Jersey launched its first regulated online gambling site and currently 6 of AC’s 12 casinos offer online poker to state residents. Recently the New Jersey Division of Gaming Enforcement released its internet gambling figures for the last six weeks of 2013, showing gambling operators took $8.4 million in revenue during an introductory phase hit by technical and payment difficulties.

So far, Borgata and its partner PartyPoker accounted for $3.75 million of total New Jersey online revenues, equal to around 45% of the market. From that figure, $1.9 million was generated from poker and a $1.8 million derived from its online casino. Next, Caesars accounted for $2.38 million of total revenues, with $1.2 million from poker and $1.17 million from online casino games. The Trump Taj Mahal Casino Resort ($883k); The Tropicana Casino ($748k), Trump Plaza Hotel Casino ($427k) and the Golden Nugget ($179k) made up the rest of the online gambling pie.

According to the latest results, New Jersey is projected to generate around $100 million in revenue for 2014, although senior VP of Moody’s Investors Service, Peggy Holloway, believes the figure will be rise to between $250 million and $500 million, as the state overcomes its initial teething period.

“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,” explained Peggy Holloway.