The race is on. Since February, the competition for Internet gaming has become like a horse race among the first three states who view Internet gaming as a revenue generator.
The federal Department of Justice (DOJ) revised its policy in December 2011, softening the definition of online gaming. The new official language created opportunities and eliminated obstacles to states legalizing Internet poker and other online betting programs.
While my home state of New Jersey was out front early on, it’s who crosses the finish line first that gets the win. Nevada Governor Brian Sandoval put pen to paper on February 21, while a last minute snag in the bill’s language threw a wrench into the New Jersey timeline.
Governor Chris Christie required a 10-year trial and “upped” the tax fee to 15 per cent. He signed New Jersey’s legislation on February 26. Delaware actually was first, passing their legislation last year.
Now, the goalpost has again changed. Which state, among New Jersey, Nevada and Delaware, will be the first to operate a fully functioning online wagering system? Christie is a competitive guy, so I fully expect a sprint to the finish.
In both New Jersey and Nevada, Republicans Christie and Sandoval reached compromises with their Democratic legislatures. Sadly, this refreshing leadership and counterpart cooperation remains limited to the state level.
New Jersey’s legislation will permit online slots, blackjack and other table games. The state’s 15 percent tax rate of online casinos from in-state players is more than double Nevada’s legislated 6.7 percent from online poker-only casinos.
Regulatory and industry experts believe Nevada will be the first state to go live with online gaming, probably by summer. Delaware has set September as their goal.
Not to be outdone, New Jersey has mandated its gaming enforcement division to deliver regulations and develop an effective system by late May and no later than late November. Somewhat skeptical, Caesars Entertainment Chairman and CEO Gary Loveman believes it more realistic for his four Atlantic City casinos- Bally’s, Caesars, Harrah’s Resort and Showboat-to plan for startup in 18 months to two years. Some Wall Street gaming analysts agree.
All potential casinos would have to undergo a comprehensive licensing process to begin operating Internet wagering systems in Atlantic City. Rather than reinvent the wheel, New Jersey officials are examining Internet other jurisdictions‘ gambling regulations to transfer the most ideal regulations and expedite the process. Nevada has already licensed a few Internet poker companies and will make a robust effort to get started quickly to reaffirm their rank as the number one gaming state.
Despite years of trying, the powers that be in Washington have not shown this leadership skills at all… at least not yet. There is some movement again to pass national Internet gaming legislation. With more states surely to follow, the feds want to be part of the action.
And why shouldn’t they? The American Gaming Association (AGA) claims almost 85 countries have legalized online gambling, generating almost $35 billion wagered online globally each year. This number includes millions of players in the United States. The AGA projects American bets of $10 billion annually by 2017, up from about $4 billion in illegal gambling in 2011.
Both supporters and opponents recognize uniformity has its benefits in eliminating fraud. The long-proposed Senate bill has faced dissent from many state governors and others who charged it unfairly awarded Nevada excessive regulatory clout and fees. They fear that national legislation and taxation would undermine states rights and drain their revenues.
The earlier federal legislation, which only regulated Internet poker, assumed a Nevada monopoly. It divided tax revenue between Washington and states where the bettors reside and the legal website’s location.
With New Jersey and Delaware, plus other potential states, enacting their own legislation, that scenario changes. Plus, states are exploring how to pool resources and connections to expand the market. The big guys like Caesars and MGM Resorts have always favored federal legislation, believing it would create a larger universal and liquid market.
So, what is the plan going forward this year? While everyone wants record speed for their program, the regulatory process must kick in and succeed. The polling shows the public willing to give the industry its big chance to make the right first impression. They trust regulators with developing an honest system that secures their money as it enters cyberspace.
And they’re off… May the best state win.
