Inside the NJ Internet gambling law

You might not have heard, but the New Jersey legislature voted to legalize Internet gaming. The bill in question (S490) passed both houses and awaits Governor Christie’s signature. So what does it mean?

The new law changes the Casino Control Act to permit Atlantic City casinos to offer gambling over the Internet to residents of New Jersey and those who live outside the United States.

To play, gamblers must first establish an account with the casino.

The computers, servers, monitoring rooms, and hubs must be housed in a “restricted area” in a casino or in an off-site location that is still in Atlantic City.

Things get tricky with taxation. There’s a gross tax on wagers of 8% (same as for regular gambling), with a 30% investment alternative tax and a 15% investment alternative–a 52% effective tax rate. According to the bill, CRDA can use that money to support racetracks in other parts of the state.

Within a fiscal year of sports betting being implemented in New Jersey, the investment alternative tax falls to 10%, and the investment alternative to 5%, leaving a much more manageable 23% effective tax rate. Subsidies to the tracks also stop then. Seems like the horsemen have a real incentive to block any sports-betting law, and the casinos have a big incentive to push it.

Applicants have to verify their name and residency before opening an account and gambling.

None of the following people can bet online:
(1) the Governor 1or Lieutenant Governor1;
(2) any State officer or employee or special State officer or employee;
(3) any member of the Judiciary;
(4) any member of the Legislature;
(5) any officer of Atlantic City; or
(6) any casino employee, casino key employee or principal employee of a casino licensee.

Bad news for casino employees who were hoping to unwind by playing legal online poker in their off-hours. This seems a bit onerous.

If money in an account sits dormant for too long (a period that’s not specified in this law), the casino must contact the holder (“by mail, phone, and computer”) and, if it doesn’t get a reply, must close the account, with 50% of the account’s value going to the state, 50% to the casino. Didn’t Christie suggest stores do this with gift cards, too?

There are some problem gambling controls:

The words “If you or someone you know has a gambling problem and wants help, call 1-800 GAMBLER,” or “some comparable language approved by the commission, which language shall include the words “gambling problem” and “call 1-800 GAMBLER,”” must be “prominently and continuously displayed to any person visiting or logged onto Internet wagering.” It’s like a surgeon general’s warning on cigarettes; hopefully it has more impact.

An account holder can establish a loss limit, beyond which he can’t gamble anymore, or cap his max bet, or suspend his account temporarily or permanently. While in suspension, casinos can’t market to him.

There’s a lot of material in the bill that hasn’t been widely reported on–I suggest you read it for yourself.

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