internet gambling illustration
Vernon Ogrodnek

The Division of Gaming Enforcement could begin drafting new Internet gambling regulations as early as the first week in February under a bill approved by the state Senate in Trenton on Thursday.

Senators approved the measure authorizing Internet gambling in New Jersey by a vote of 33-3. The Assembly passed the bill three days earlier. The legislation now heads to Gov. Chris Christie, who will have 45 days to veto the measure, or else it will become law.

“This is just the first step for New Jersey (for) what we expect to be the Silicon Valley of Internet gaming,” said Sen. Raymond Lesniak, D-Union, one of the bill’s primary sponsors.

Two Republican senators voiced concern with the proposal prior to the vote, citing Atlantic City’s slumping revenues.

Sen. Michael Doherty, R-Hunterdon, Somerset, Warren, said he wanted casino and Internet gambling to be offered at some of the state’s racetracks, which have been angling to add slot machines and promising to pay a higher tax comparable to the 55 percent tax rate imposed in Pennsylvania.

New Jersey taxes slot machine and table game proceeds at only 8 percent. Under the Internet gambling bill, the tax rate for online casino revenue would be 10 percent.

“All they want is the opportunity,” Doherty said of the racetracks. “Maybe this body would start moving forward and let them have the opportunity. That’s all they want and we keep saying no, no, no, and I don’t see anything really changing. I just see a downward spiral.”

Lawmakers researched the tax rate of other states, and found 10 percent to be a competitive rate, particularly if they want New Jersey to be a hub for Internet gambling, Sen. Jim Whelan, D-Atlantic, said. Nevada taxes at 6.75 percent and California has a Internet gambling bill that proposes a 10 percent tax rate.

“To be a hub, we have to have a tax rate that is going to be competitive, and we think the 10 percent will accomplish that,” Whelan said.

Sen. Joseph Pennacchio, R-Essex, Morris, Passaic, said he would vote for the bill but that New Jersey needed to recognize competition from other states was drawing from Atlantic City.

“We better wake up and smell that coffee,” he said. “Because one of these days, Atlantic City, which is in bad shape now, is going to be in a lot worse shape.”

Lesniak, Whelan and other supporters of the bill believe Internet gambling will draw new investment to Atlantic City, such as PokerStars, one of the world’s largest online poker companies reportedly in negotiation to buy The Atlantic Club.

Lawmakers crafted language in the bill that would allow PokerStars and other offshore companies to apply for a license to operate an Internet gambling system on behalf of an Atlantic City casino, although their application would be contingent on an investigation by the Division of Gaming Enforcement in consultation with the U.S. Department of Justice.

Other bills that passed during Thursday’s Senate session include one that made some minor revisions to the state’s casino law, such as allowing employees of the Atlantic City Convention & Visitors Authority to retain their seniority once the agency is merged with the Casino Reinvestment Development Authority. Another revision would recalculate how casinos contribute to the Atlantic City Alliance based on gross revenue generated during the prior quarter rather than fiscal year.

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