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Legislation

US – New Jersey says yes to internet gaming

By - 27 February 2013

Following close on the heels of Nevada and Delaware, New Jersey Governor Chris Christie has signed a bill making New Jersey the third state in the nation to legalise Internet gambling.

The bill is expected to kick-start the biggest expansion of gambling in New Jersey since the first casino began operating in Atlantic City in 1978. It is also seen as being the new saviour for the state’s struggling casino resorts Atlantic City.

As well as offering a completely new revenue stream for the struggling casinos  the idea is to drive traffic to bricks and mortar by offering comps like free shows, meals and hotel rooms, to reward online play that would be redeemed in person at a casino.

Each bricks and mortar casino will be given an online licence with Mr. Christie has approving a 10-year trial period for online betting in a move which has seen gaming taxation raised from ten to 15 per cent.

He said: “This was a critical decision, and one that I did not make lightly. But with the proper regulatory framework and safeguards that I insisted on including in the bill, I am confident that we are offering a responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole.”

New Jersey Senator Raymond Lesniak added:  “This is good news for Atlantic City that it hasn’t heard in years.”

He believes the legislation will save one or two Atlantic City casinos that might have faced closing, preserving as many as 4,000 jobs.

Casino Control Commission Chairman Matthew Levinson said: “Internet gambling holds the potential to provide a boost to the city’s casino operators as they rebound from the effects of the economy and increased competition, while adding another dimension to efforts to reinvigorate the city.”

Wells Fargo Securities analyst Dennis Farrell believes internet gaming in Atlantic City could be worth $1.5bn in annual revenues within five years.

“All New Jersey license holders will benefit, but properties with strong brands and gaming facilities will likely see the most upside,” Mr. Farrell said.

He believes that Borgata and Caesars Entertainment are the companies best positioned to capture online business in New Jersey. Wells Fargo said in the ‘near term’ online wagering could generate between $650m to $850m.

Operators have clearly seen the signs that Atlantic City would definitely regulate. MGM Resorts recently made moves to keep its stake in the Borgata having previously agreed to sell it following concerns about its partnership in Macau. Meanwhile Rational Group, the owner of online poker giant PokerStars, is claiming a piece of the online market by trying to purchase the Atlantic Club Casino in Atlantic City, the first time an Internet gaming company has bought a bricks-and-mortar casino. PokerStars was forced to leave the online market in April 2011, paying US$731m to the Department of Justice in August 2012 to clear the way for it to apply for a gaming license once any necessary legislation is passed. As a land-based operator that would now be a given.

The new sector will be governed by the State Division of Gaming Enforcement with a start date expected within three to nine months.

Caesars Chairman and Chief Executive Gary Loveman said he expects to offer online poker in Nevada this year and in New Jersey in about 18 months.

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