(Newswire.net — April 27, 2018) —
A Tale of Two Houses: Will Democrats Advance Online Gambling Legislation in New Jersey?
NJ Flips from GOP to DEM as Online Gaming Fans Ante Up for the Possibilities
On April 5, 2013 Governor Chris Christie signed online gambling into law in the Garden State. This groundbreaking move laid the foundations for the resurgence of the US online gambling market. Under Republican governor Christie, the state of NJ entrusted the Division of Gaming Enforcement (DGE) with the responsibility of administering all online gambling activity. Internet gaming has long been a hot topic issue for New Jersey voters, and the move to fully legalize online gambling activity in the state had far-reaching ramifications.
Under Christie’s stewardship, New Jersey online poker, online casino and interstate gambling activity came to be. In the infancy stages of online gambling in NJ, expectations far exceeded realities. However, by October 31, 2017, New Jersey’s 2017 online gambling revenues had already surpassed $200 million, with 2 months to go. Industry aficionados now expect NJ to close out the year at approximately $240 million + in online Gross Gambling Revenue (GGR). Thanks to legislation enacted on February 26, 2013, New Jersey has established itself as the benchmark according to which all other US online gambling states will operate.
How Much Money Has New Jersey Generated from Online Gambling Activity?
Gambling insiders are quick to point out that the results generated by New Jersey’s online gambling market are not disappointing; it’s the expectations of regulators that were unreasonable. At inception, those promoting online gambling in the Garden State expected revenues of $250 million – $1 billion. It was none other than Chris Christie who was supremely bullish on New Jersey’s gambling prospects. According to NJ tax rates, all gambling activity in the Garden State comes with a 15% tax. In 2013, Christie was expecting tax revenues of $160 million, but State Sen. Jim Whelan touted that figure as absurd. In 2013, Sen. Whelan lent his support to online gambling legislation, but believed that Christie’s estimation was way off base.
At the end of year one, New Jersey reported online gambling revenue of just $135 million. At 15%, that amounts to just $20.25 million in tax revenues. At the time, critics of the Republican governor found a voice, and rallied against him. Many people had written off the New Jersey online gambling market, labeling it nothing more than a failed attempt at reviving a moribund industry. But time has proven the critics wrong. By the end of year number three, online gambling revenues increased to $200 million per annum. More importantly, revenue growth was up 35% per month throughout 2016. The reversal began in mid-2015 and has continued ever since. Now that 2017 is winding down, the trends have held steady. New Jersey online gambling – online casino and online poker – now averages $20 million per month. The 15% tax on gross gambling revenue only scratches the surface of total proceeds that make their way into state coffers.
Consider this: The 15% tax on gross gambling revenue (GGR) is added to a 2.5% tax which goes to the CRDA (Casino Reinvestment Development Authority). Besides for the above figures, there are also peripheral payments made through casinos to the state of New Jersey. These include $250,000 paid annually by each of the 5 major casinos currently operating in Atlantic City. These include Tropicana, Resorts, Borgata, Caesars, and Golden Nugget Casino. The $250,000 amounts to $1.25 million per year for treatment of gambling addiction.
Besides that, there is an additional $250,000 payable by each of these 5 casinos to renew their operator licenses every year. The total figure generated by the state of New Jersey in 2016 for online gambling activity ranges between $35 million – $37.5 million. With almost $40 million per year from online gambling activity, New Jersey has found an impressive cash cow to plug budget shortfalls in the Garden State. The $40 million per year figure does not include the jobs that have been created through the contracts with online gambling providers. Additionally, players are winning money off online casino games, and they too are being taxed. Viewed in perspective, it is hard to put an exact number on revenues being collected through New Jersey online casinos and poker rooms.
What Is Governor Phil Murphy’s Position on Online Gambling?
Clearly, Gov. Chris Christie was a staunch advocate of online gambling, despite his overinflated opinion of the value of the industry. His replacement, Gov. Phil Murphy – a Democrat – is purportedly also an advocate of online gambling. While Murphy was campaigning for office, he informed voters that he was in favor of expanding casinos beyond Atlantic City. He cited job creation as the reason for his support. Advocates believe that Democrat Phil Murphy could raise the issue of casino expansion in November 2018 as a referendum issue.
The fate of existing casinos in New Jersey is less certain under Phil Murphy’s stewardship. His proposals to expand gambling are designed to prevent New York from benefiting from New Jersey players. A hot item that the new governor will face is sports betting. This issue is making its way to the US Supreme Court. Currently, federal law prohibits sports betting in 46 of 50 states. According to professional associations, sports betting is in direct violation of the 1992 Professional and Amateur Sports Protection Act. New Jersey senator, Raymond Lesniak wants the Garden State to determine its own regulations on sports betting activity. At present, New Jersey permits land-based casinos, racetrack betting, online poker, and online casino games. Governor Murphy has not indicated his preferences in this regard.