The New Jersey Legislature Takes Next Step Towards Legalization of Internet Gambling

On April 3, 2012, the New Jersey Senate Budget and Appropriations Committee moved forward an Internet wagering bill which will allow Atlantic City, NJ casinos to offer both New Jersey residents and persons outside of New Jersey the opportunity to place a wagers on casino games via the Internet. The latest version of the bill expanded the potential persons who could wager to include gamblers in other states and countries, suject to state gaming regulators agreeing that it is legal to accept such wagers.

This is the latest attempt by the New Jersey Legislature to legalize Internet Gambling in the state. A similar bill was passed in 2011 but was vetoed by Governor Chris Christie who was concerned that the prior bill both (1) violated the federal Wire Act and (2) did not comport with the New Jersey Constitution which only allows gambling wagers to be made in Atlantic City. The concerns as to a potential Wire Act violation were seemingly addressed when U.S. Department of Justice, in a memorandum dated September 20, 2011, issued in response to requests from both New York and Illinois, reversed the DOJ’s prior held position that the Wire Act prohibited all forms of on-line gambling. The DOJ’s opinion now limits the Wire Act’s prohibition to only on-line wagers on sporting events. The current New Jersey bill also attempts to address the N.J. Constitutional issue by allowing only licensed Atlantic City casinos to take the bets and requiring that all the equipment used by the casinos to conduct the internet wagering to be located within the territorial limits of Atlantic City.

The current bill also provides:

  • all games, including poker, which may be played at a casino, as well as variations or composites thereof, may be offered through Internet wagering;
  • all equipment used by a licensee to conduct Internet wagering, including but not limited to computers, servers, monitoring rooms, and hubs, must be located either in a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City and all Internet wagers will be deemed to be placed when received in Atlantic City by the licensee regardless of the player’s physical location within this State; any intermediate routing of electronic data in connection with a wager will not affect the fact that the wager is placed in Atlantic City;
  • in order to participate in Internet wagering, a player must be physically present in New Jersey or a state or county where such wagers are legal whenever a wager is placed by that player; each licensee that conducts Internet wagering must be able to verify that a player is physically present in New Jersey when placing a wager;
  • the N.J. Division of Gaming Enforcement must confirm on a continuing basis that a licensee’s equipment is able to verify that the player is physically present in this N.J. or elsewhere where internet wagering is legal when placing a wager;
  • Internet wagering in this State will be subject to the provisions 2 of, and preempted and superseded by, any applicable federal law;
  • there is imposed an annual tax on Internet wagering gross revenues in the amount of 10% of such gross revenues which will be paid into the casino revenue fund;

The internet wagering bill’s next legislative hurdle will be a May 14, 2012 Senate Budget Committee vote.