A decade later, N.J. eyes extending online gaming for another 10 years

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It’s been nearly a decade since New Jersey became one of the first U.S. states to legalize internet gambling, allowing people in the state to play and bet money on virtual versions of poker, slots, and other games found at Atlantic City casinos without having to leave their homes.

Today, the Garden State’s online gaming market is the largest in the country, generating almost $1.4 billion in revenue last year.

But the law that made it legal is actually scheduled to expire in November 2023, since it was authorized by law for only 10 years.

Now, state lawmakers are considering a bill that would extend internet gambling here for another 10 years. Proponents say the ever-growing market — which ballooned during the coronavirus pandemic — is an asset to Atlantic City casinos and a highlight of New Jersey’s often-uneven gaming industry, especially as nearby states expand their gaming portfolios.

They also note it provides the state with tax money for important programs and warn jobs could disappear without an extension.

“It’s something we can’t just walk away from,” said state Assemblyman Ralph Caputo, D-Essex, a former casino marketing executive and main sponsor of the measure (A2190).

“This is a rapidly growing industry, and New Jersey is at the forefront,” Caputo added.

Assemblyman Don Guardian, R-Atlantic, a former Atlantic City mayor, agrees.

”It’s one of the reasons we still have casinos in Atlantic City,” said Guardian, another sponsor.

The bill relates only to online casino games and does not involve online sports betting. New Jersey legalized wagering on sporting events in 2018 — both in person and online — under a separate statute that is not poised to expire next year.

The Assembly’s Tourism and Gaming committee voted 7-0 last week to advance the measure extending internet gambling until 2033. State Sen. James Beach, D-Camden, chair of the chamber’s gaming committee, introduced a Senate version Thursday, saying online gaming has been “a major economic driver” for the state.

The bill must pass both the full Senate and Assembly before Gov. Phil Murphy can decide whether to sign it into law. Murphy told a gaming convention in Atlantic City on Thursday that he would approve it.

“New Jersey remains the leader in the rapidly evolving gaming landscape,” the governor said during the keynote address to the East Coast Gaming Congress and NextGen Gaming Forum. “We are going to do whatever we can to nurture the online industry. This is no fad.”

Asked why leaders aren’t seeking to make internet gaming permanent beyond 10 years, Caputo said they want to leave it open in case adjustments are needed should online gaming starts to impact in-person gambling.

He also said caution remains because of an ongoing concern: that internet gaming can increase gambling addiction, especially in the wake of the isolation COVID-19 brought. A survey last year from the National Council on Problem Gambling showed the risk of gambling addiction has doubled since 2018.

Caputo noted there has been “a lot of over-marketing of (gambling) sites to the point where it’s almost obscene.”

“It’s a mixed bag,” the lawmaker said. “On one hand, we need the revenue. On the other hand, we need to be careful where we go in the future.”

Then-Gov. Chris Christie signed the original law legalizing internet gaming in New Jersey in 2013. Some officials were leery, fearing the move might be unconstitutional and could fuel not just addiction but corruption. Then-state Sen. Ray Lesniak, D-Union, said he also got pushback from a casino industry worried it would hurt in-person gambling and from those who preferred federal legislation instead.

But state leaders moved forward in hope it would double casino revenue at a time when Atlantic City’s gambling halls were struggling mightily, thanks in part to casinos opening in neighboring New York and Pennsylvania.

“We knew where the puck was going,” Caputo said. “Atlantic City had collapsed in terms of brick-and-mortar casinos.”

Lesniak said he wrote the law to expire after 10 years as “an escape clause” should critics’ concerns come true.

New Jersey is now home to 31 online gaming websites that operate through the nine casinos in Atlantic City, the only places in the state where casino gaming is allowed.

Internet gambling revenue has increased steadily in the state over the last decade, accounting for about a third of total monthly gaming revenue in New Jersey. After slot machines, it’s the second largest revenue source for Atlantic City casinos, which have won $4.79 billion from gamblers online since 2013, according to data from the state Division of Gaming Enforcement, but not all of that money goes directly to the casinos. Some of it is shared with the outside tech platforms.

Those figures does not include online sports betting revenue, which is tallied separately.

“Internet gaming serves a critical role in the diversification of the Atlantic City gaming product, allowing operators to deliver an experience consumers have demonstrated that they want, and to remain competitive in the regional gaming market,” said Jane Bokunewicz, faculty director of of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University.

The pandemic “greatly accelerated” the growth, Bokunewicz said. Both online games and sports betting provided a lifeline when Atlantic City’s casinos were closed for 3 1/2 months in 2020 because of COVID-19. They also allowed gamblers still worried about the virus to keep playing from afar even after in-person gaming returned.

“They kept those casinos open,” Caputo said.

There are signs online gaming revenue has leveled off, though Bokunewicz said it’s difficult to tell if that’s a lasting trend or a “seasonal shift” in gaming activity, with people preferring gambling in person during the summer, when casinos are “traditionally more active.”

Bokunewicz said New Jersey will “need to continue to innovate and deliver new and engaging gaming products to compete” as other states expand gambling.

“Internet gaming would seem to be an important and lasting part of Atlantic City’s gaming portfolio moving forward,” she said.

Most major online gambling companies — including FanDuel, DraftKings, BetMGM, and Bally’s — support the 10-year extension. So does the Casino Association of New Jersey, the industry’s trade group.

“We look forward to another 10 years of continued growth,” said Mark Giannantoni, the association’s president.”

Caputo added that casino taxes help fund numerous social service programs in New Jersey, including for senior citizens and residents with disabilities.

“If those funds were not there, local municipalities would have to make up for it to maintain those programs,” the lawmaker said, hinting that higher taxes on residents would then be a possibility.

Lesniak, author of the original law, had a short answer when asked if the extension is needed.

“It’s a no-brainer,” he said.

The Associated Press contributed to this report.

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Brent Johnson may be reached at [email protected]. Follow him at @johnsb01.

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