Political Battle Brewing Over New Jersey Online Gambling Revenue

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Sunday, May 26th, 2013 | Written by Charles Washington

Even as New Jersey works steadily toward their goal of launching regulated online gambling in 2013, a growing controversy is taking shape at the state capital.

That controversy pits the administration of Governor Chris Christie against not only independent budget analysts, but also Democrats in the State House and Senate.

The point of contention: official projections of how much tax revenue New Jersey will take in during the first year of regulated online gambling in the state.

Critics tear into Christie’s numbers

The official budget projections were called “bogus” by a powerful state senator. And an independent budget advisor to New Jersey estimated online gambling revenues are overstated by a minimum of 600%.

When he submitted his budget for FY 2014 to the State Assembly, Gov. Christie assumed $180 million in tax revenue from online gambling. The fiscal year in New Jersey starts in July and runs through the end of the following June, meaning that the clock is set to start ticking on FY 2014 relatively soon.

Online gambling projections a primary target

Critics have found fault with Christie’s projections at large, but the online gambling numbers appear to be drawing special scrutiny. Some of that attention is no doubt a by-product of the large amount of mainstream media attention that regulated online gambling in New Jersey is receiving, making it a convenient vehicle for criticism of Christie and his proposed budget.

But another part of the attention stems from the fact that independent analysts and industry watchers agree with Christie’s political critics that online gambling projections contained within his administration’s budget are, at best, unrealistic.

How unrealistic? Christie’s budget claims $180 million in FY 2014, but the consensus of market analysts is that the number will almost certainly be below $50 million, and perhaps as low as $20 million.

Estimated revenue targets a steep challenge

One big issue for New Jersey is that online gambling will likely be operational for only a portion on FY 2014. Even optimistic scenarios don’t have the state taking its first regulated online bet until the fall, putting it a few months behind schedule before it even gets started. And launching isn’t the same as running at full capacity – New Jersey will likely experience the same unexpected setbacks that have delayed rollouts in other regulated online gambling markets.

Another problem for optimistic revenue projections is the apparent exit of PokerStars from the New Jersey online gambling picture. Many believed that the presence of PokerStars would energize interest in New Jersey online gambling, much in the same way that PokerStars motivated tremendous interest in US online poker prior to Black Friday.