Christie again vetoes New Jersey’s Internet gambling law

ATLANTIC CITY – Gov. Chris Christie vetoed a bill Thursday that would have made New Jersey the third state to legalize gambling over the Inter­net, but said he’d sign it if it had a 10-year time limit and a higher tax rate on casinos.

It was the second time since 2011 that the Republican governor has vetoed an Internet bill passed by the New Jersey Legislature. But the path Christie laid out toward winning his approval heartened supporters of online gambling, including Atlantic City’s 12 casinos, numerous online betting companies and state lawmakers who hope to make the seaside resort a nationwide hub for Internet gambling.

Gaming analysts took Christie’s veto and subsequent comments as a sign that Internet gaming will eventually happen in New Jersey.

Maquarie Securities gaming analyst Chad Beynon said the New Jersey online gaming market could generate approximately $230 million to $300 million a year in gaming revenues.

Nevada and Delaware have enacted laws legalizing Internet betting, which also is going on offshore, untaxed and unregulated.

In a statement that read more like an endorsement than a veto, Christie said he supports online gambling, with some minor changes, including bumping up the tax rate on casinos’ online winnings from 10 percent to 15 percent.

“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,” Christie wrote. “While Atlantic City’s reputation and stature as one of the premier resort destinations on the East Coast are well-chronicled, it is no secret that revenue from the region’s most important industries, gaming and tourism, has been in decline.

“Since the beginning of my administration, I have stressed the importance of reversing the trend of economic contraction in Atlantic City and have made the revitalization of the region’s gaming and tourism industries a key priority,” Christie said.

The initial beneficiary of Christie’s remarks could be the Isle of Man-based Rational Group, which owns online gaming giants PokerStars and Full Tilt Poker. The company has made an official offer to buy the Atlantic Club casino and has filed papers seeking preliminary regulatory approval.

“The deal was said to be contingent on New Jersey legalizing online gaming, so we would expect this to continue to move forward,” Beynon said.

Rational Group spokesman Eric Hollreiser said the company is moving forward with its agreement to buy the casino.

“We have consistently said that this bill will drive economic development and job creation in New Jersey and are committed to play our part in that process,” Hollreiser said. “We are pleased that Gov. Christie sees the significant benefits of mixing online and offline gaming.”

Had Christie signed the bill, it would have represented the largest expansion of legalized gambling in New Jersey since the first casino opened there in 1978.

State Sen. Raymond Lesniak, one of the staunchest supporters of Internet gambling in New Jersey, said he was encouraged by Christie’s comments and predicted the changes the governor wants could be quickly accomplished in a new bill.

Internet gambling based in Atlantic City would “pump hundreds of millions of dollars into its ailing revenues, and will prevent the closing of at least one casino and save thousands of jobs,” Lesniak said. “New Jersey will now have an opportunity to be the Silicon Valley of Internet gaming and reap the huge economic benefits that will flow into the state.”

The extra money is needed as Atlantic City continues to lose market share, revenue and jobs to casinos in neighboring states. Since 2006, New Jersey’s casino revenue has fallen from $5.2 billion to just more than $3 billion last year.

Christie vetoed New Jersey’s first attempt at Internet gambling in March 2011, citing concerns about its constitutionality and worrying about the proliferation of illegal backroom Internet betting parlors that would be difficult to find and prosecute.

The latest bill tried to address those concerns by providing hefty fines for anyone who runs or even advertises such a backroom betting parlor.

Another of Christie’s previous criticisms was that the state constitution mandates that all casino gambling take place in Atlantic City. Supporters elicited testimony from leading legal experts that because the computer servers where the bets would be accepted are in Atlantic City, that would satisfy the constitutional requirement.

The bill would have legalized the online playing, for money, of any game currently offered at Atlantic City’s casinos, including poker. It would have taxed Internet gambling revenues at 10 percent, up from the 8 percent that the casinos pay for money won on their premises.

Donald Weinbaum, executive director of the Council On Compulsive Gambling of New Jersey, said the state currently has about 350,000 problem gamblers, a number that would surely grow if the ease of online gambling was offered.

“Gov. Christie has been a vocal advocate for expanding addiction treatment services in New Jersey,” Weinbaum said. “We are glad that he understands that for many individuals, gambling can be as addictive as drugs and alcohol and the consequences just as devastating.”

Weinbaum said existing treatment and prevention programs for compulsive gambling are woefully underfunded. The bill would have required each Internet gambling licensee to pay $150,000 toward compulsive gambling treatment and prevention programs.

Review-Journal writer Howard Stutz contributed to this report.

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