ATLANTIC CITY — A state senator has announced a plan to expand New Jersey’s Internet gambling market even before the first hand of online poker was dealt under the state’s new law.
State Sen. Raymond Lesniak on Thursday unveiled proposed legislation that would allow international online gambling companies to set up operations in New Jersey, while only taking bets from foreign gamblers. The companies would be subject to New Jersey’s stringent licensing procedures and taxes, but would likely be able to give their customers greater confidence that their operations are legitimate and regulated.
Despite a proposal that could mean more cost and scrutiny for operators, Lesniak, D-Union, said he was confident that foreign companies are interested in relocating to New Jersey because online gambling companies spurred the proposal. He declined to name the companies he spoke with but said discussions have been ongoing for two months.
“I didn’t come up with this proposal. Gaming companies did themselves because they want to come here,” Lesniak said.
New Jersey’s current Internet gambling legislation requires licensed online gambling operators to team up with land-based Atlantic City properties in order to offer gaming to New Jersey residents.
Under Lesniak’s new proposal, which he plans to introduce in December, foreign companies could seek licensure though the New Jersey Division of Gaming Enforcement, subject to the same standards as other New Jersey operators. The companies would have to be located in the state, but would not be specifically tied to Atlantic City. They would be limited to offering gambling to the foreign markets they currently serve.
New Jersey, in return, would receive a 15 percent tax on winnings — the same tax levied on Internet gambling offered to state residents — though the companies would receive credits for taxes they already pay to their countries of origin. New Jersey would also receive payments into a fund that would raise $20 million annually for the state’s horse racing industry.
Roger Gros, publisher of Global Gaming Business magazine, said Lesniak’s proposal is “right on the money,” as international companies are itching to get in on the U.S. market because of the legitimacy that comes with U.S. operation and particularly New Jersey’s standards.
More complicated would be agreements that would have to be made with other countries to allow foreign residents to gamble through New Jersey operators, Gros said. Gibraltar, the Isle of Man and Malta are all currently home to Internet gambling companies that in many cases have such agreements with other countries.
The World Trade Organization, which acts as a forum for governments to negotiate trade agreements, may take issue with New Jersey’s proposal, Lesniak noted Thursday.
“The international agreements would have to have some sort of revenue sharing there,” Gros said. “It’s a good idea, but it’s all very complicated. I’m not sure how it’s going to play out from that point of view.”
Adam Ozimek, a researcher with Philadelphia-based Econsult Solutions, estimated that the industry the legislation would bring to New Jersey could be worth between $5 billion and $8 billion in annual revenue with Internet gambling and sports betting combined. Ozimek also estimated the industry could bring 11,000 to 16,000 jobs to the state.
According to Lesniak, the legislation would also allow the foreign companies to take sports bets from overseas, another issue that could be a point of contention for the World Trade Organization. New Jersey’s ongoing fight to legalize sports betting was dealt another blow this week as a federal appeals court denied the state’s petition for a rehearing, leaving the U.S. Supreme Court as the state’s only option for intervention.
“This really drives home the insanity and the stupidity of the federal ban on sports betting that Gov. Christie and I are fighting,” Lesniak said.
Christie was silent on Lesniak’s proposal Thursday. Colin Reed, a spokesman for the Governor’s Office, did not return a request for comment. Lisa Spengler, a spokeswoman for the New Jersey Division of Gaming Enforcement, which would be responsible for issuing licenses under Lesniak’s legislation, said the administration plans to review the proposal.
While Lesniak would not comment on which foreign companies might be interested in relocating to New Jersey, he did address questions about PokerStars, an online gambling firm based on the Isle of Man that has yet to be successful in entering the New Jersey market.
A deal for PokerStars to purchase the Atlantic Club Casino Hotel earlier this year fell through following delays in PokerStars licensure. The company has since teamed up with Resorts Casino Hotel to offer online gambling but has not secured the approvals needed to engage in soft play, which began Thursday evening. The company’s application remains under review, state regulators said.
“PokerStars is the dominant, worldwide Internet gaming operator. It wouldn’t surprise me if they wanted to set up shop in New Jersey,” Lesniak said.
Contact Jennifer Bogdan: 609-272-7239 or JBogdan@pressofac.com
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