Raising the standards for companies processing Internet gambling payments could encourage banks and major credit card companies to accept more deposits, adding millions to the state’s fledgling industry, one executive told Trenton lawmakers Monday.
Testifying in favor of a bill that would encourage foreign Internet gambling companies to set up operations in New Jersey, Chris Thom, chairman of Secure Trading Inc., told a state Senate committee that a critical component of the legislation would require Internet gaming payment processors to go through New Jersey’s stringent licensure process. Currently, state law requires the processors, which act as middle men between gamblers and online casinos, endure a less rigorous certification process.
Thom said the most “egregious” issues with illegal Internet gambling payments have developed as payment processors have camouflaged gambling transactions under other codes. That practice has made credit card companies wary of approving the transactions even in states where the activity is legal. Visa, for example, is approving just 10 to 15 percent of Internet gambling transactions, including lottery and horse-racing wagers, Thom said.
William J. Pascrell III, a New Jersey lobbyist, told the Senate State Government, Wagering, Tourism and Historic Preservation Committee that the legislation has the ability to take New Jersey’s roll-out from “pedestrian to the next level.”
“New Jersey has to prove to the banking community and the credit card industry that they can trust this industry,” Pascrell said. “Money laundering, money fraud, credit card fraud are all done through payment processors, so we need to make sure these payment processors are the best of the best and are licensed with full suitability and full due diligence.”
The state’s online gambling revenue — which registered $10 million in February — continues to climb but not at the pace some predicted. That’s due, in part, to difficulties with credit card companies and banks processing the transactions. Pascrell likened the situation to the early days of online shopping, when credit cards would not accept those online transactions.
Still, the crux of the bill introduced in December and sponsored by Sens. Raymond Lesniak and Jim Whelan, would allow the state to license international Internet gambling firms. Those firms would only be allowed to offer online gaming to their current clientele around the world, but would have to have a physical presence in Atlantic City.
The companies would benefit from the legitimacy associated with New Jersey licensure, while the state would see added jobs and a share of tax revenue, lawmakers say. The companies would be taxed at 15 percent, the same tax New Jersey casinos pay on Internet gambling revenue.
“We expect that this would be a big boost for revenues in Atlantic City,” Lesniak, D-Union, said.
Questioned by Sen. Shirley Turner, D-Hunterdon, Mercer, as to how the legislation would bring additional foot traffic to Atlantic City, Lesniak said it wouldn’t. The added revenues, however, would help the industry, he said.
“If we are relying on foot traffic to make casinos viable, there are going to be two or three casinos that are going to close very soon,” Lesniak said.
An economic analysis by Econsult Solutions predicts the plan could generate between $5 billion and $8 billion a year in revenue and produce 11,000 to 16,000 jobs.
The bill now heads to the Senate Budget and Appropriations Committee.
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