The New Jersey Legislature took another step towards legalizing
online gaming in New Jersey. On May 10, 2012, the New Jersey
Assembly Regulatory Oversight and Gaming Committee introduced
amendments to the prospective internet gaming legislation which was
passed by a State Senate committee. The amendments provide
additional clarity with respect to the licensing of prospective
internet gaming service providers. The proposal also increases the
tax rate on internet gaming revenue and provides additional
safeguards to keep out dubious internet gaming companies that have
facilitated what the U.S. government considers to be illegal
wagering from U.S. residents.
The proposed amendments to the New Jersey Casino Control Act do
provide the opportunity for an internet gaming service provider to
share in internet gaming gross revenue with a New Jersey casino
licensee. This is significant in that the New Jersey Casino Control
Act has historically only permitted the sharing of gaming revenue
in very limited circumstances. In fact, licensed slot machine
manufacturers still cannot share in a percentage of gaming revenue
in what are called "participation games" - the sole
exception being permitted participation on multi area progressive
slot system machines.
Another significant licensing issue puts forth in the Assembly
committee's amendments is the requirement that prior to
providing any internet gaming services to a New Jersey casino, the
internet gaming service provider must be fully vetted and licensed
by the New Jersey Division of Gaming Enforcement. The revised
sections to the internet gaming legislation also specifically bar
any prospective internet service provider who knowingly and
willingly, offered, accepted or made available bets or wagers using
the internet from persons located in the United States after
December 31, 2006, unless such activity was licensed by a Federal
or State authority. That date is significant as it was the
effective date of the federal Unlawful Internet Gaming Enforcement
Act, which effectively prohibited the facilitation and enabling of
interstate internet gambling in the United States. The New Jersey
internet gaming legislation goes even further in that it bars all
persons that may have facilitated such post, December 31, 2006
internet wagers from the U.S. including those who simply provided
intellectual property, trademarks and website support to an
operator who offered such bets and wagers.
While several of the Committee members continued to express
concerns regarding the constitutionality of internet waging under
the New Jersey Constitution, proponents of the legislation continue
to maintain that internet wagering would be constitutional since
all bets and wagers would emanate from Atlantic City New Jersey,
where all computer servers and related equipment must be located
under the proposed legislation.
As for when this legislation may be passed, there have been press reports that Governor Christie may continue
to have some reservations but there is a consensus that the
internet gaming legislation is vital to the Atlantic City casino
industry and it has the support of the casino industry. This latest
committee action continues to move forward the prospect of legal,
regulated and taxed, internet wagering in New Jersey.
This article is for general information and does not include
full legal analysis of the matters presented. It should not be
construed or relied upon as legal advice or legal opinion on any
specific facts or circumstances. The description of the results of
any specific case or transaction contained herein does not mean or
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subject to varying results. The invitation to contact the authors
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