Today, New Jersey Governor Chris Christie conditionally vetoed A2578, the legislation that would allow New Jersey casinos to offer internet wagering.   Under the New Jersey Constitution, the Governor has authority to veto a bill, but send recommended changes back to the Legislature, which may then adopt his changes and present the bill to him again for his approval. 

In his remarks accompanying the conditional veto, the Governor states that he believes that “now is the time for our State to move forward…by becoming one of the first States to permit Internet gaming.”  The Governor emphasized the need for a “narrowly tailored approach to Internet gaming” that both preserves Atlantic City as a destination yet embraces tools that can reverse the trend of contraction in the gaming industry.  Thus, the Governor recommends that the bill be amended to grant the Division of Gaming Enforcement wide latitude to regulate internet gaming; recommends extending the prohibition on casino-related employment for state employees and legislators to internet gaming licensees and enhance funding for compulsive gambling treatment.  The Governor also recommended that the legislation sunset after ten years, unless renewed, in order to allow time to study and revisit the concept.

Looking at the specific language recommended by the Governor, he proposes:

  • Granting broad authority to the Division of Gaming Enforcement, by amending section 70 of the Casino Control Act, to allow the Division to define and limit the rules of internet gaming;
  • Including within the definition of “authorized game” in the Casino Control Act any game that the Division of Gaming Enforcement may determine by regulation to be suitable for use through the internet;
  • Increasing the tax rate on internet gaming revenues from 10% to 15%;
  • Increasing the fee for issuance of an internet gaming permit from $200,000 to $400,000, the fee for renewal from $150,000 to $250,000, and the annual payment by a licensee to compulsive gambling programs from $150,000 to $250,000;
  • Providing that the legislation sunsets after 10 years;
  • Requiring the Division to prepare an annual report on the impact of internet gaming on problem gamblers and gambling addiction;
  • Enhancing the language that states that internet gaming does not occur unless the wager is accepted by a casino within the territorial limits of Atlantic City;
  • Removing the exclusion granted to internet promotional gaming credits when calculating internet gross gaming revenue for tax purposes;
  • Removing a change to the definition of “restricted casino area” that would include areas where internet gaming is conducted within the definition of a “restricted casino area;”
  • Opening to public inspection the identity and nature of services provided by any person or firm providing professional services in connection with the authorization or conduct of internet gaming, and requiring that this information be reported to the Division quarterly, including services by lawyers, consultants, or lobbyists;
  • Eliminating an exemption from casino service enterprise licensing for payment processors, customer identity services, telecommunications and other service providers;
  • Eliminating the requirement that “all equipment” used to conduct internet gaming by a casino be on the premises of a licensed casino, instead requiring that a casino’s “primary” equipment be located within the casino facility;
  • Prohibiting any state officer or employee from holding an interest in or negotiating for any company involved with internet gaming; and
  • Removing the requirement that the Division consult with the Department of Justice regarding certain internet gaming operators.

The next step will be for the Legislature, if it chooses, to consider the Governor’s changes.  Overall, however, these changes provide a good illustration of what internet gaming could look like in New Jersey – and soon.